UPI Payments to Remain Free for Consumers, Finance Ministry Clarifies
The Ministry of Finance on Saturday clarified that consumers will not face transaction charges for using the Unified Payments Interface (UPI), amid discussions over the possible introduction of a merchant discount rate (MDR). The government said all person-to-person (P2P) UPI transactions will remain free, while the vast majority of merchant transactions will also continue without charges.
If introduced, the MDR would apply only to a limited set of merchant transactions above a specified threshold and at a nominal rate, lower than those charged on debit and credit card payments. The proposed framework follows Parliament’s passage of the Taxation and Other Laws (Amendment) Bill, 2026, which seeks changes to Section 10A of the Payment and Settlement Systems Act, 2007.
The ministry said the framework is aimed at ensuring UPI’s long-term financial sustainability and supporting continued investment in cybersecurity, fraud prevention and infrastructure. UPI processed 2,366 crore transactions worth ₹29.9 trillion in July 2026 and is currently live in 11 foreign countries. The government said a self-sustaining revenue model would be needed to support UPI’s expansion, particularly across rural and semi-urban areas, while keeping the platform affordable and secure.
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