India Clarifies UPI Charges Remain Free
Analysis based on 14 articles · First reported Aug 08, 2026 · Last updated Aug 08, 2026
The clarification removes uncertainty over potential UPI charges, supporting continued adoption and transaction volumes, which is positive for digital payment companies and the broader fintech sector. The potential introduction of a nominal MDR on select high-value merchant transactions could slightly increase costs for large merchants but is unlikely to dampen overall UPI growth.
The India — India, through the India — Ministry of Finance (India), issued a clarification on August 8, 2026, stating that consumers will not be charged for Unified Payments Interface (UPI) transactions, and all person-to-person (P2P) payments will remain free. Any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions above a specified threshold and at a nominal rate, significantly lower than debit or credit card MDRs. This clarification follows the India — Lok Sabha passing a bill to amend Section 10A of the Payment and Settlement Systems Act, 2007, as part of the Taxation and Other Laws (Amendment) Bill, 2026. The government emphasized that the amendment is an enabling provision to ensure UPI's long-term sustainability, technological development, and resilience, requiring investments in cybersecurity and infrastructure. The India — National Payments Corporation of India (NPCI)-led UPI and Services Steering Committee will decide on any MDR framework after Parliament passes the Bill. UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 and is live in 11 foreign countries. The government rejected reports of external influence, calling them unfounded.
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