New Delhi – The Indian government on 8 August 2026 reiterated that users of the Unified Payments Interface (UPI) will not be charged for any transactions, and that the “vast majority” of merchant payments will continue to be free. The clarification follows the passage of a Bill in the Lok Sabha that amends Section 10A of the Payment and Settlement Systems Act, 2007, and has sparked widespread speculation about possible new fees.

According to an official statement, the amendment is an “enabling provision” that does not itself impose a merchant discount rate (MDR). Instead, any future MDR would be applied only to a limited set of merchant transactions that exceed a specified threshold, and the rate would be “nominal” and lower than the MDRs typically levied on debit and credit‑card payments.

All person‑to‑person UPI transactions will continue to be free, and consumers making payments will not face any transaction charges

- Government

The statement added that once Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, the UPI and Services Steering Committee – chaired by the National Payments Corporation of India (NPCI) – will decide on the exact parameters of any MDR, if introduced.

Officials emphasized that the move is intended to create a sustainable revenue model for the platform as transaction volumes surge. In July 2026, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore, making it the world’s largest real‑time payment system. The platform is now live in eleven foreign countries, with several others expressing interest in adopting or integrating the technology.

The government also addressed concerns that external pressures were influencing the policy change, describing such narratives as “unfounded, completely false and misleading.” It noted that India introduced UPI in 2016 and made it free for both merchants and citizens in January 2020, underscoring the domestic origin of the system.

Key objectives cited for the amendment include:

  • Ensuring long‑term sustainability and technological advancement of UPI.

  • Funding continuous upgrades in cybersecurity, fraud prevention, and payment infrastructure.

  • Encouraging market expansion by fostering competition among service providers.

  • Reducing reliance on subsidies and moving toward a self‑sustaining revenue framework.

While the government has not announced a specific MDR rate, it has signalled that any charges would be “threshold‑based rather than imposed across all UPI transactions,” preserving the free‑of‑charge experience for most merchants and all consumers.

Stakeholders are urged to rely on official communications from the Ministry of Finance, the Reserve Bank of India, and NPCI for accurate information, and to avoid circulating unverified messages.