UPI Transactions to Remain Free for Users, Nominal Charges for Some Merchants: Government Clarifies

The Union government has announced that consumers will continue to enjoy a fee-free experience when making transactions through the Unified Payments Interface (UPI). On Saturday, the Ministry of Finance reiterated that all peer-to-peer transactions will not incur any charges, easing concerns following the recent passage of the Taxation and Other Laws Amendment Bill 2026.

This bill, approved by the Lok Sabha just two days prior, allows banks and payment service providers to implement fees on transactions conducted through UPI and RuPay debit cards. It proposes amendments to the Payment and Settlement Systems Act of 2007, raising alarm among merchants who might be subject to the Merchant Discount Rate (MDR). This fee, charged by banks to businesses, typically ranges from 1% to 3% for credit card transactions and can go up to 0.9% for debit cards.

In July alone, UPI recorded an impressive 2,366 crore transactions totaling nearly Rs 29.9 lakh crore, highlighting its significance as a real-time payment system in India. The finance ministry further clarified that only a select number of merchant transactions would be affected by the MDR, which would apply only above a certain threshold and at a nominal rate.

This development is crucial for both consumers and merchants, as there were fears that increased processing costs could ultimately be passed down to consumers. However, the government has reassured that the burden on everyday users will remain minimal. The emphasis on keeping person-to-person transactions free underscores India’s commitment to promoting digital payment systems and financial inclusivity.

As UPI continues to evolve, the government aims to foster a secure and efficient digital payments ecosystem, encouraging widespread adoption among users and businesses alike. Stakeholders in India’s burgeoning fintech landscape are expected to adapt to these changes while ensuring that the consumer experience remains unaffected.

Source: scroll.in