The Indian government assures that person-to-person UPI payments will stay free, while any future merchant charges will be minimal, as discussions on fee implementation continue.
The Finance Ministry has moved to cool speculation that users will soon face charges for ordinary UPI payments, saying there will be no fee on person-to-person transfers and that any future merchant charge would be limited and modest. In a statement on Saturday, the ministry said the vast majority of merchant transactions would stay free, while any merchant discount rate, or MDR, applied to larger payments would be “far lower than debit or credit card MDRs”.
The clarification came after Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, which includes changes to the Payment and Settlement Systems Act, 2007. According to the ministry, those changes are meant as an enabling measure to support UPI’s long-term sustainability, technological upgrades and resilience, rather than as an immediate levy on consumers.
The debate intensified this week because the bill opens the door for banks and payment-system providers to charge fees on UPI and RuPay debit card payments. The ministry said the UPI and Services Steering Committee, chaired by the National Payments Corporation of India, would decide whether any MDR should be imposed. It also stressed that, if introduced, the charge would remain well below the rates typically seen on cards, where credit card MDRs can run from 1% to 3% and debit card charges can reach 0.9%.
The government already subsidises low-value digital payments to small merchants through an incentive scheme for RuPay debit cards and low-value BHIM-UPI transactions. But the finance ministry said that model cannot carry the system indefinitely. It noted that the state has paid out ₹8,730 crore under the scheme from 2021-22 to 2024-25, while a parliamentary finance committee found that this covered only 11% of industry costs.
Officials also pointed to the scale of the network now built around UPI. In 2025-26, more than 24,000 crore transactions worth ₹314 lakh crore were processed, while only 4% of person-to-merchant payments exceeded ₹2,000. Even so, those larger transactions accounted for roughly two-thirds of UPI’s value, underscoring why policymakers are weighing whether the present zero-fee model can keep pace with rising cybersecurity, fraud-prevention and infrastructure costs. NPCI has previously said that account-to-account UPI transfers remain free for consumers, and earlier clarifications have repeatedly sought to distinguish those payments from merchant transactions involving prepaid instruments or other fee-bearing channels.
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