No UPI transaction fees for individuals, merchant MDR only on select cases, says India
New Delhi, August 8 – The Indian government has reiterated that UPI payments will continue to be free for all individual users. Person‑to‑person transactions on the platform will not attract any fee, and most merchant‑side UPI payments will also remain cost‑free.
According to a formal statement from the finance ministry, a merchant discount rate (MDR) could be introduced in the future, but it would be limited to a narrow range of merchant transactions that exceed a certain monetary limit, and the rate would be significantly lower than the fees charged on debit or credit cards. There is no intention to impose a uniform charge across all merchants.
The upcoming amendment to the Taxation and Other Laws (Amendment) Bill, 2026 will modify Section 10A of the Payment and Settlement Systems Act, 2007. Post‑amendment, the UPI and Service Operations Committee, chaired by the NPCI, will decide on the necessity and level of any MDR.
The ministry clarified that the amendment is not a move to levy fees on the public. Instead, it is an enabling provision aimed at bolstering UPI’s long‑term stability, fostering technological advancement, expanding financial inclusion and strengthening the system’s ability to manage emerging risks.
With UPI transaction volumes accelerating, the government stressed the need for substantial investment in cybersecurity, fraud prevention and continuous enhancement of the digital infrastructure to keep the platform secure and dependable.
Officials also highlighted the importance of encouraging more companies to broaden their UPI offerings, which would increase competition and further solidify the digital payments ecosystem. However, they warned that relying solely on government subsidies is insufficient; a sustainable revenue model is required for the next stage of UPI’s evolution.
The ministry dismissed media claims of external pressure influencing policy changes, calling them false. It pointed out that without such pressure, India would not have launched UPI in 2016, nor would the free‑to‑use arrangement for citizens and merchants have been introduced in January 2020.
Government data indicates that in July 2026, UPI handled 2,366 crore transactions valued at approximately ₹29.9 lakh crore, and the system is now active in 11 foreign countries, with several others showing interest.
The government concluded that UPI will stay free for everyday users, and any future MDR will be applied only to a limited set of merchant transactions at a minimal rate.