New Delhi: The government has clarified that UPI users will not have to pay any transaction fee, amid ongoing discussions over the possibility of introducing a Merchant Discount Rate (MDR) on certain UPI payments.
The clarification follows earlier statements from the National Payments Corporation of India (NPCI) and is aimed at addressing concerns among consumers about whether the proposed changes could increase the cost of everyday digital payments.
Will UPI Users Have to Pay Any Charges?
The government has made it clear that ordinary users will not be charged for making UPI payments.
Person-to-person (P2P) transactions, such as sending money to family members or friends, will continue to remain free.
This means consumers will not have to pay an additional transaction fee when using UPI for routine payments.
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Will Merchants Have to Pay UPI Charges?
Most UPI transactions made at merchant outlets will also continue to remain free.
However, if MDR is introduced in the future, it is expected to apply only to certain large or high-value merchant transactions.
The government has clarified that there will not be a blanket MDR charge on all merchants or every UPI transaction.
How Will MDR on UPI Payments Work?
Under the proposed framework, a threshold could be fixed for applying MDR to selected UPI transactions.
The government has indicated that any such charge would be nominal and significantly lower than the MDR applicable to debit and credit card transactions.
The proposed approach means:
- Everyday UPI payments will remain free for consumers.
- P2P UPI transactions will remain free.
- Most merchant transactions will continue to remain free.
- MDR, if introduced, will apply only to selected transactions.
- The exact threshold and MDR rate are yet to be finalised.
MDR Decision Is Yet to Be Finalised
A final decision on whether MDR will be imposed on UPI payments, and how much it would be, has not yet been taken.
The government has proposed amendments to the Payment and Settlement Systems Act as part of the legislative process. Further decisions will be taken after the Taxation and Other Laws (Amendment) Bill, 2026 is passed by Parliament.
The UPI and Services Steering Committee, chaired by NPCI, is expected to decide the framework for MDR, including whether it should be introduced and the applicable rate.
The government has reiterated that UPI will remain free for ordinary citizens and that there is no plan to charge users for their regular day-to-day UPI payments.
Why Is a New Revenue Model Being Considered?
UPI has grown rapidly since its launch in 2016, making digital payments a part of everyday life in India.
The increasing scale of transactions also requires continuous investment in:
- Cybersecurity
- Fraud prevention
- Digital payment infrastructure
- Technology and network capacity
The government has indicated that relying only on government subsidies may not be sufficient to support the next phase of UPI’s expansion.
A sustainable revenue model could therefore help strengthen the UPI ecosystem and support its long-term development.
UPI Records 2,366 Crore Transactions in July 2026
The rapid growth of UPI is reflected in its transaction volumes. In July 2026, UPI recorded around 2,366 crore transactions, with the total transaction value reaching approximately ₹29.9 lakh crore.
UPI has also expanded beyond India’s borders and is currently being used in 11 foreign countries, strengthening the country’s digital payments presence globally.
Government Warns Against Unverified UPI Charge Messages
Amid discussions surrounding MDR, the government has urged citizens to rely only on information released through official channels.
People have been advised to check updates from:
- Ministry of Finance
- Reserve Bank of India (RBI)
- NPCI
The government has also appealed to citizens not to forward unverified messages or claims related to UPI charges.
For now, the key takeaway is clear: users will not be charged for regular UPI payments, while any future MDR would be limited to specified merchant transactions and is yet to be finalised.
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