Amid growing speculation over UPI transaction fees, the government clarified that consumers will not have to pay any charges for making payments through the platform.
In a statement issued on Saturday, August 8, Ministry of Finance said, all person-to-person transactions will continue to be free of charge. The merchant discount rate (MDR) will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, much lower than debit or credit card MDRs.
Notably, most transactions will remain free of charge for merchants on UPI. "MDR, if introduced, will only be threshold based and not blanketly levied to all," the ministry said.
After the Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007, the “UPI and Services Steering Committee” headed by NPCI will decide on MDR, it added.
The governemnt further flagged media reports that indicated external influences driving policy changes. Calling these reports unfounded, completely false and misleading, the ministry said, "If external pressure had been a factor, the government would not have introduced UPI in 2016 or made it free of charge for both merchants as well as citizens since January 2020 and ensured that it became the world's largest real time interoperable payment system."
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
