The government moved to end speculation about fees on the national digital payments system, stating on Saturday that consumers will face no charges for UPI use and that most merchant transactions will also stay free. Any future merchant discount rate, if applied, would cover only a narrow range of high-value merchant deals at a low level below standard card rates. Person-to-person transfers will remain without cost. The statement followed an amendment to the Payment and Settlement Systems Act that prompted discussion on possible charges. Officials described the change to Section 10A as an enabling measure that does not itself set any rate. If the Taxation and Other Laws Amendment Bill passes, the UPI and Services Steering Committee led by the National Payments Corporation of India would determine any MDR. The approach would be threshold-based so the bulk of merchant payments continue without fees. Officials said the goal is a sustainable revenue model for UPI amid rising volumes that demand ongoing spending on security, fraud controls and infrastructure. UPI has grown into the largest real-time payment network since its 2016 launch, handling 2,366 crore transactions worth 29.9 lakh crore rupees in July alone and operating in 11 other countries. The clarification follows Lok Sabha approval of the bill authorising possible charges on UPI and other electronic modes. The amendment is presented as a step to support long-term viability, technological upgrades and resilience rather than an immediate fee imposition. Reliance on subsidies alone cannot support further expansion, the statement noted, and a self-sustaining model is needed to encourage more providers and maintain competitiveness in rural and semi-urban areas. Claims of external pressure were dismissed as unfounded. The government emphasised that UPI remains an Indian innovation kept free for citizens since 2020 while building the world’s largest interoperable real-time system. The changes aim to keep the platform secure, inclusive and ready for continued growth in the digital economy.
