India gov't clarifies UPI will stay free for users, nominal merchant fees possible
Government assures consumers won't pay transaction charges; limited MDR may apply to select high-value merchant payments.
Conversation activity · last 3 days peak 2/hr
Summary, timeline and people extracted by Claude from 2 items across 1 source · 22h ago. Quotes are verbatim.
India's government on August 8-9, 2026 clarified that the Unified Payments Interface (UPI) will remain free for all consumers and person-to-person transactions, following concerns sparked by an amendment to the Payment and Settlement Systems Act. The government confirmed that any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions above a specified threshold at nominal rates, far lower than debit or credit card fees. The amendment is framed as an enabling provision to ensure UPI's long-term sustainability as transaction volumes surge.
- UPI remains completely free for all consumers and person-to-person transactions; no charges will be imposed on ordinary users.
- Government left door open for nominal MDR on select merchant transactions above a threshold, substantially lower than debit/credit card rates, but no rates or thresholds set yet.
- Amendment is described as enabling provision to ensure UPI's sustainability given 2,366 crore monthly transactions requiring continuous investment in cybersecurity and infrastructure.
- Decision on any MDR will be made by NPCI-headed UPI and Services Steering Committee only after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.
How it unfolded
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Bloomberg published coverage of India grappling with the pros and cons of fees for UPI payments as the debate continued following the government's clarification.
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Analysis Rationale for enabling provision
The government explained that UPI's exponential growth in transaction volumes—2,366 crore transactions worth ₹29.9 lakh crore in July 2026 alone—requires significant continuous upgrades in cybersecurity, fraud prevention, and infrastructure. It argued that reliance on subsidies alone is not viable for future growth.
“Reliance on subsidies alone is not viable for the next wave of growth. A balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready.”
Ministry of Finance -
The government rejected suggestions that the policy change was driven by external pressure, calling such claims 'unfounded, completely false and misleading.' It noted that if external pressure were a factor, India would not have introduced and maintained free UPI since 2016-17.
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The government issued a statement on Saturday, August 8, 2026, clarifying that consumers will not pay transaction charges for UPI, and the vast majority of merchant transactions will also remain free. Any future MDR would be threshold-based and apply only to limited merchant transactions at nominal rates.
“UPI will remain free for citizens”
Ministry of Finance · Google News ↗ -
The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, which proposed amending Section 10A of the Payment and Settlement Systems Act, 2007 to authorize government to permit charges on UPI and other electronic payment modes.
What people are saying verbatim
“UPI will remain free for citizens”
Ministry of Finance, Government policymaker · NDTV ↗ · Aug 8
“They will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs”
Ministry of Finance, Government policymaker · Telegraph India · Aug 8
“Reliance on subsidies alone is not viable for the next wave of growth. A balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready.”
Ministry of Finance, Government policymaker · Telegraph India · Aug 8
“This is unfounded, completely false, and misleading”
Ministry of Finance, Government policymaker · Telegraph India · Aug 8
“All person-to-person transactions will also continue to remain free”
Ministry of Finance, Government policymaker · NDTV ↗ · Aug 8