The government on Saturday issued a clarification regarding charges on Unified Payments Interface (UPI) transactions, reassuring users that there will be no fees imposed on person-to-person (P2P) payments. The Finance Ministry stated that individuals can continue sending and receiving money through UPI without any cost, putting to rest widespread concerns about potential charges on everyday transactions. However, the ministry indicated that a merchant discount rate (MDR) may be introduced in the future, but only for a limited category of merchant transactions . These charges, if implemented, would apply only to transactions exceeding a certain threshold and would be kept at a nominal rate. Importantly, the government emphasised that there would be no blanket MDR imposed on all merchant payments and that any such fee would be significantly lower than the charges currently applicable on debit and credit card transactions. The clarification follows speculation surrounding proposed amendments to the Payment and Settlement Systems Act, 2007. Reports had suggested that these changes could result in charges for UPI users, triggering concern among millions who rely on the platform for daily payments. The government clarified that the amendment is merely an enabling provision designed to ensure the long-term sustainability, technological advancement, and resilience of the UPI ecosystem. The proposed changes form part of the Taxation and Other Laws (Amendment) Bill, 2026. Once approved by Parliament, decisions regarding MDR—if any—will be taken by a steering committee led by the National Payments Corporation of India (NPCI). The ministry highlighted that the exponential growth in UPI transactions necessitates continued investment in infrastructure, cybersecurity, and fraud prevention. In July 2026 alone, UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore, reflecting its massive scale and importance. The system is now operational in 11 countries, with several others showing interest . The government also dismissed claims of external influence on policy decisions, calling such reports misleading and unfounded. Also Read: PIL in Supreme Court Seeks Fresh JPSC Prelims Over Irregularities Row
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