The Central Government has clarified that consumers will continue to use UPI services without paying any charges. The government has also said that the vast majority of merchant transactions are expected to remain free, addressing concerns that users may soon have to pay a fee for making UPI payments.
The clarification comes amid speculation surrounding proposed changes to the Payment and Settlement Systems Act, 2007. The government has stated that the proposed amendment does not automatically introduce charges on UPI transactions.
According to the government, the objective of the proposed framework is to support the long-term growth and sustainability of the UPI ecosystem while continuing to protect consumers from unnecessary transaction charges.
Will Consumers Have to Pay Charges for UPI Payments?
The government has made it clear that person-to-person, or P2P, UPI transactions will continue to remain free.
This means that users sending money directly to another individual through UPI will not be charged for the transaction under the current framework.
The government has also indicated that even if a Merchant Discount Rate, or MDR, is introduced in the future, it would not apply to every UPI transaction.
Any such framework would apply only to a limited category of merchant transactions above a specified threshold, according to the government’s clarification.
What Is the Proposed Change in the UPI Rules?
Concerns about possible UPI charges emerged after a proposed amendment to Section 10A of the Payment and Settlement Systems Act, 2007.
However, the government has clarified that the proposed amendment is only an enabling provision. In simple terms, the amendment itself does not impose an MDR or transaction charge on UPI payments.
If the proposed legislation is passed, the decision regarding any future MDR framework would be taken according to the mechanism established under the new provisions.
The government has said that the UPI and Services Steering Committee, headed by NPCI, would decide on the MDR, if any, after the relevant legislation comes into effect.
Most Merchant UPI Payments Expected to Remain Free
One of the biggest concerns among users was whether every UPI payment made to a shop, business or merchant would attract a charge.
The government has clarified that any future MDR, if introduced, would be based on a specified transaction threshold rather than being applied to all merchant payments.
This means that the vast majority of merchant UPI transactions are expected to remain free.
The government has also indicated that any applicable MDR would be nominal and lower than the charges generally associated with many debit and credit card transactions.
Why Is the Government Considering a New Framework?
UPI transaction volumes have increased significantly over the years. Managing a large digital payments network requires continued investment in technology, cybersecurity, fraud prevention and payment infrastructure.
According to the government, the proposed changes are intended to help create a sustainable financial model for the UPI ecosystem as its scale continues to grow.
The government has argued that depending entirely on government subsidies may not be a long-term solution for supporting the future expansion of digital payment infrastructure.
A sustainable revenue model could also encourage more companies and service providers to participate and expand their operations within the digital payments ecosystem.
Government Says UPI Will Remain Free for Citizens
The government has reiterated its commitment to keeping UPI accessible and affordable for citizens.
It has rejected claims suggesting that the proposed changes are intended to introduce widespread charges on ordinary UPI users.
According to the government’s statement, UPI has remained free for citizens and merchants since January 2020, and the proposed changes are aimed at ensuring that the payment system remains technologically strong and financially sustainable in the future.
The government has also described UPI as a home-grown digital payments innovation and said that the focus remains on maintaining a robust, inclusive and future-ready payment ecosystem.
UPI Continues to See Rapid Growth
Since its launch in 2016, UPI has grown into one of the world’s largest real-time digital payment systems.
According to the information provided, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore in July 2026 alone.
The platform has also expanded beyond India and is operational in multiple countries, with several other nations exploring the possibility of adopting or integrating UPI-based payment systems.
The rapid growth in transaction volumes has increased the need for stronger payment infrastructure, cybersecurity systems and fraud prevention measures.
What Should UPI Users Do?
UPI users should not rely on unverified social media posts, WhatsApp messages or other rumours claiming that all UPI transactions will soon become chargeable.
The government has advised citizens to rely on official updates and announcements from the Ministry of Finance, the Reserve Bank of India and the National Payments Corporation of India.
Until any new rules are officially introduced, users should follow verified information rather than rumours about UPI charges.
Conclusion
The government’s latest clarification provides relief to millions of UPI users. Person-to-person UPI transactions will continue to remain free, and the government has stated that the majority of merchant transactions are also expected to remain free.
While a future MDR framework may be considered for a limited category of merchant transactions above a specified threshold, the proposed amendment itself does not introduce charges on all UPI payments.
For now, consumers can continue using UPI for regular transactions without paying a fee. Users should keep an eye on official announcements for any future changes to UPI rules or merchant transaction charges.
