New Delhi – The Indian government has categorically affirmed that Unified Payments Interface (UPI) transactions will continue to be free for citizens, directly addressing and refuting rumors about the imposition of new charges.
In a recent clarification, the Ministry of Finance stated that consumers would face zero transaction fees on everyday payments, and all Person-to-Person (P2P) transfers would remain free. This statement aims to quash mounting speculation that proposed legislative changes might introduce widespread fees across the popular digital payment network.
Clarifying Policy Amendments
The government's clarification comes in response to reports suggesting that upcoming legal amendments could lead to new fees. Officials dismissed claims that policy changes were influenced by external pressures, labeling such narratives as "unfounded, completely false and misleading." The Ministry highlighted that UPI was introduced in 2016 and made free for both merchants and citizens in January 2020, becoming the world's largest real-time interoperable payment system.
The policy context revolves around proposed amendments to Section 10A of the Payment and Settlement Systems (PSS) Act, 2007, under the Taxation and Other Laws (Amendment) Bill, 2026. The government clarified that this amendment is an enabling provision designed to ensure the long-term sustainability, technological robustness, and security of the UPI ecosystem.
Future Merchant Discount Rate (MDR) Framework
As transaction volumes continue to surge, sustained investments in cybersecurity, fraud prevention, and core infrastructure are crucial. The government noted that relying solely on subsidies is not viable for long-term growth, especially to expand UPI into rural and semi-urban areas and foster market competition.
- For Citizens: All payments and P2P transfers remain 100% free.
- For Merchants: The vast majority of merchant transactions will continue to incur no charges.
- Future MDR: Once Parliament passes the amendment, the "UPI and Services Steering Committee," led by the National Payments Corporation of India (NPCI), will decide on any potential Merchant Discount Rate (MDR). Any future MDR would apply strictly to a limited set of merchant transactions exceeding a specific threshold, set at nominal rates significantly lower than standard debit or credit card MDRs.
Official data from July 2026 revealed the immense scale of the ecosystem, with UPI processing 2,366 crore transactions valued at ₹29.9 lakh crore. The system is currently operational in 11 foreign countries, with several others expressing interest in adopting the technology.
The Ministry urged the public to disregard unverified messages and instead rely solely on official communications from the Ministry of Finance, the Reserve Bank of India (RBI), and the NPCI.