UPI Payments to Remain Free for Users
UPI Payments to Remain Free for Users; Limited Merchant MDR May Be Introduced
The Government of India has clarified that UPI payments will continue to remain free for consumers. Any future charges, if introduced, are expected to be limited to certain merchant transactions and would not apply universally.
The clarification comes amid discussions surrounding the proposed amendment to the Payment and Settlement Systems Act, 2007 (PSS Act).
Key Points on UPI Charges
- No charges for consumers: Individuals making payments through UPI will not be required to pay transaction charges.
- P2P payments remain free: Person-to-person UPI transactions will continue without charges.
- Limited MDR for merchants: If a Merchant Discount Rate (MDR) is introduced in the future, it would apply only to a specified category of merchant transactions crossing a prescribed threshold.
- No blanket MDR: The proposed framework is not intended to impose MDR on every UPI merchant transaction.
- Lower than card charges: Any such merchant charge is expected to be nominal and substantially lower than the MDR generally associated with debit and credit card payments.
The exact framework for MDR, if introduced, would be determined by the UPI and Services Steering Committee headed by NPCI, after the proposed legislative amendment receives approval from Parliament.
Why Is the PSS Act Being Amended?
UPI has witnessed extraordinary growth since its introduction and now handles billions of transactions every month. Maintaining such a large-scale payment infrastructure requires continuous investment in areas such as:
- Cybersecurity and fraud prevention
- Payment infrastructure and technology upgrades
- System reliability and resilience
- Expansion of digital payments into underserved regions
- Development of a competitive and sustainable UPI ecosystem
The proposed amendment is therefore intended to provide an enabling framework for the long-term financial sustainability and technological development of UPI.
UPI’s Continued Growth
UPI has become a major part of India’s digital payment ecosystem since its launch in 2016. According to the Government’s latest figures, UPI processed approximately 2,366 crore transactions worth ₹29.9 lakh crore during July 2026.
The payment platform has also expanded internationally and is currently operational in 11 countries, with interest from several other nations.
What Does This Mean for Users and Merchants?
For ordinary UPI users, the Government’s position is clear: there will be no charges for making everyday UPI payments.
Similarly, person-to-person transactions will continue to remain free. For merchants, the possibility of MDR exists under the proposed framework, but any such charge would be restricted to specified transactions and thresholds rather than being imposed across the entire UPI ecosystem.
Government’s Position
The Government has stated that the proposed amendment should not be interpreted as a move to make UPI payments chargeable for citizens. Instead, it is intended to create a sustainable framework that can support UPI’s future expansion while maintaining affordability and accessibility.
The Government has also advised citizens to rely on information issued through official channels, including the Ministry of Finance, Reserve Bank of India and NPCI, rather than forwarding unverified claims regarding UPI charges.
In Brief
UPI continues to remain free for consumers. The proposed changes may create a mechanism for introducing a nominal, threshold-based MDR on a limited category of merchant transactions in the future.
The objective is to ensure that India’s UPI infrastructure remains secure, innovative, financially sustainable and capable of supporting the next phase of digital payment growth.
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