New Delhi: The Centre has clarified that consumers will not have to pay transaction charges for making payments through UPI, amid concerns over a recent amendment to the Payment and Settlement Systems Act.
The government said all Person-to-Person (P2P) UPI transactions will continue to remain free. It also clarified that if Merchant Discount Rate (MDR) is introduced in future, it would apply only to a limited set of merchant transactions above a specified threshold and at a nominal rate, much lower than debit or credit card MDRs.
The vast majority of merchant transactions on UPI will continue to remain free, the government said.
The clarification comes after the amendment to the PSS Act triggered speculation that UPI users could soon be charged for everyday transactions. The Centre said the amendment is only an enabling provision aimed at ensuring the long-term sustainability, technological advancement and resilience of the country’s digital payment infrastructure.
If Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, the UPI and Services Steering Committee headed by NPCI will decide on MDR, if any.
The government said UPI’s rapid growth requires continued investment in cybersecurity, fraud prevention and infrastructure. It also stressed the need for a sustainable revenue model to encourage greater competition and innovation.
UPI, launched in 2016, processed 2,366 crore transactions worth ₹29.9 lakh crore in July 2026 alone, according to the government. The platform is now live in 11 foreign countries.
Reiterating its position, the Centre said UPI will remain free for citizens and there will be no charges on everyday transactions by consumers.
