India Clarifies No UPI Charges for Users, Limited Merchant MDR Possible

The Indian government has clarified that consumers will not face any transaction charges for using the Unified Payments Interface (UPI), following the passage of a bill to amend the Payment and Settlement Systems Act. In a statement issued on August 8, 2026, the Ministry of Finance said that while person-to-person transactions will remain free, a nominal Merchant Discount Rate (MDR) may be introduced for a limited set of merchant transactions above a certain threshold.

The clarification comes two days after the Lok Sabha passed the Taxation and Other Laws Amendment Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007. This amendment has sparked public debate, with some interpreting it as a move to impose charges on ordinary users. The government stated that the amendment is an enabling provision designed to ensure the long-term sustainability, technological advancement, and resilience of the UPI ecosystem.

According to the ministry, any future MDR will be nominal and significantly lower than the rates applicable to debit and credit card transactions. The specifics will be determined by the UPI and Services Steering Committee, headed by...