No UPI Fees for Person-to-Person Payments, Government Reaffirms

New Delhi, Aug 10 (KNN) The Government has clarified that consumers will not be charged for making payments through the Unified Payments Interface (UPI), while any future Merchant Discount Rate (MDR) would apply only to a limited category of merchant transactions and at a nominal rate.

The clarification follows the proposed amendment to Section 10A of the Payment and Settlement Systems Act, 2007, through the Taxation and Other Laws (Amendment) Bill, 2026. The amendment is described by the government as an enabling provision for determining a framework for UPI charges.

According to the government, all Person-to-Person (P2P) UPI transactions will continue to remain free. It also stated that the majority of merchant transactions will remain free, while any MDR, if introduced, would be threshold-based rather than applicable to all merchant transactions.

The government said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would decide on the MDR framework, if any, after the proposed legislation is passed by Parliament.

The government said the proposed provision is intended to support the long-term sustainability of UPI and enable continued investment in areas such as cybersecurity, fraud prevention and payment infrastructure. 

It also cited the need for a sustainable revenue framework to support greater participation and expansion of the digital payments ecosystem.

UPI was launched in 2016 and has remained free of transaction charges for consumers. According to the government, UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026. The platform is currently operational in 11 foreign countries.

The government has also advised users to rely on information issued by the Ministry of Finance, the Reserve Bank of India and NPCI regarding any changes to UPI charges.

(KNN Bureau)