The Payments Council of India reaffirms that Unified Payments Interface transactions will stay free for users and small merchants, as industry officials focus on funding the system’s future growth and security enhancements amidst rapid expansion.
India’s payments industry has moved to calm fears that Unified Payments Interface transactions could become a new cost for everyday users. The Payments Council of India said UPI will remain free for consumers, while small merchants will also stay protected from charges for accepting it, reinforcing the government’s long-standing position that the country’s most widely used digital payment rail should not become a fee-bearing service for ordinary users. Reuters has previously reported that the Finance Ministry also dismissed speculation about Merchant Discount Rate charges on UPI as false and misleading.
The clarification matters because UPI has become a default payment method for millions of people and a crucial revenue touchpoint for neighbourhood retailers, street vendors and other small businesses. According to the Payments Council of India, any merchant service charge, where it exists, would be a commercial arrangement between a merchant and a payment provider, not a fee imposed on the customer at checkout. That distinction is meant to prevent confusion between merchant-side economics and consumer pricing.
Industry and regulatory officials have also been working to reduce friction around the system’s rapid expansion. Business Standard reported that the Reserve Bank of India recently clarified that certain small-merchant UPI transactions in the unorganised retail segment do not require a payment aggregator partner, easing compliance pressure on fintech firms with large merchant networks. Separately, National Payments Corporation of India has said bank account-to-account UPI transfers remain free for customers and merchants, with earlier interchange charges applying only to merchant payments made through prepaid payment instruments.
The wider debate now is less about whether consumers will be charged and more about how the ecosystem pays for the infrastructure behind instant, low-cost payments. The Payments Council of India said continued investment in security, resilience, fraud prevention and innovation will be essential as transaction volumes rise, highlighting a familiar challenge for policymakers: preserving UPI’s zero-cost appeal while ensuring banks, fintech companies, NPCI and regulators can fund the system’s future growth.
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