Business
08 Aug, 2026
No charges for UPI users, vast majority of transactions to remain free for merchants as well: Govt
Business To Business, New Delhi, 08 August, 2026: The government on Saturday clarified that consumers and small merchants will continue to enjoy free Unified Payments Interface (UPI) services, seeking to dispel concerns that the recent amendment to the Payment and Settlement Systems Act, 2007 would immediately result in transaction charges.
The Finance Ministry said any charges introduced in the future would apply only to a limited set of merchant transactions.
Key points
- Consumers: UPI payments will remain free.
- Small merchants: They will continue to enjoy free UPI transactions.
- Merchant Discount Rate (MDR): A nominal MDR may be introduced for certain merchant transactions in the future.
- Scope: The charges would apply only to transactions above a specified threshold.
- Rate: The government said the MDR would be significantly lower than the MDR applicable to debit and credit cards.
The clarification follows the passage of a Bill amending the
Payment and Settlement Systems Act, 2007, which provides the government with the authority to permit charges on UPI and other notified electronic payment modes.
Thus,
the legislation does not mean that consumers will start paying for UPI transactions. Any future merchant charges would be limited in scope and subject to the government's decision on when and how they are introduced.