SRINAGAR: The Government of India has clarified that UPI transactions will continue to remain free for citizens, amid concerns over the possibility of charges being introduced on digital payments. The government said consumers will not be charged transaction fees for making payments through the Unified Payments Interface (UPI) and that all person-to-person (P2P) transactions will continue to remain free. However, if a Merchant Discount Rate (MDR) is introduced in the future, it would apply only to a limited category of merchant transactions above a prescribed threshold and would be levied at a nominal rate. The government stressed that the proposed MDR would not apply to all UPI merchant transactions and would remain significantly lower than the charges generally applicable to debit and credit card payments. The clarification comes amid debate over proposed amendments to the Payment and Settlement Systems Act, 2007, with the government saying the changes have been misunderstood as a move to impose charges on ordinary UPI users. Under the proposed framework, once Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would determine the MDR, if any. According to the government, the proposed framework is aimed at ensuring the long-term sustainability, security and expansion of India’s digital payment ecosystem rather than imposing charges on users. It said the rapid growth of UPI requires continued investment in cybersecurity, fraud prevention and digital infrastructure, while greater competition is also needed to support the next phase of digital payments. UPI reportedly processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026, highlighting its growing role in India’s digital economy. The government also said UPI, which was launched in 2016-17, is now operational in 11 foreign countries, with several other nations showing interest in adopting the technology. Reiterating its position, the government said everyday UPI payments by citizens will remain free, while any future MDR would be limited to selected merchant transactions crossing a prescribed threshold. It urged citizens to rely on official information issued by the Ministry of Finance, Reserve Bank of India and NPCI and avoid spreading unverified claims about UPI charges. The government said the proposed changes are intended to make India’s digital payment infrastructure more sustainable, competitive, secure and resilient, while expanding UPI access in rural and semi-urban areas.
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