The Union government has clarified that Unified Payments Interface transactions will remain free for consumers, seeking to address concerns that recent legislative changes could result in charges on everyday digital payments.

The Ministry of Finance said person-to-person transfers would continue without transaction fees. Consumers paying merchants through UPI would also not be charged, according to the clarification issued on August 8.

The statement follows the Lok Sabha’s passage of the Taxation and Other Laws (Amendment) Bill, 2026, on August 6. The Bill contains an enabling amendment to Section 10A of the Payment and Settlement Systems Act, 2007.

The amendment creates a legal mechanism under which a Merchant Discount Rate, or MDR, could be considered for certain merchant transactions. However, it does not automatically introduce any charge.

No Final Decision on Merchant Charges

The government said that if an MDR is introduced, it would be nominal and restricted to selected merchant transactions above a specified threshold. Most merchant payments would remain free.

No threshold, rate or implementation date has been notified. The Ministry said the UPI and Services Steering Committee, headed by the National Payments Corporation of India, would decide whether an MDR should be introduced after the Bill completes the parliamentary process.

The government argued that the provision was needed to support investment in cybersecurity, fraud prevention and payment infrastructure.

UPI processed 2,366 crore transactions worth ₹29.9 lakh crore in July 2026, according to the Ministry. The payment system is currently operational in 11 foreign countries.

For consumers, the immediate position remains unchanged: no charge has been introduced for sending money or making payments through UPI.