Can banks charge for UPI payments now? Here is what we know
The Bill gives the government the power to permit charges on notified electronic payment systems, including UPI, if it decides to do so in the future.
India's Parliament has recently passed a Bill that could potentially allow banks and payment service providers to charge fees for Unified Payments Interface (UPI) transactions, following a review of the Payment and Settlement Systems Act, 2007. The proposed amendment removes the existing rule that prohibits banks and payment companies from charging Merchant Discount Rates (MDR) on UPI transactions.
However, this does not mean that UPI users will begin paying charges immediately, as the Bill does not mandate any immediate changes to the current system.
UPI, or Unified Payments Interface, is India's most widely used digital payment method, allowing people to transfer money instantly between bank accounts using their mobile phones. Launched in 2016, UPI has grown into the world's largest real-time payment system, handling billions of transactions monthly. The government and banking sector argue that introducing MDR could help banks and fintech companies invest more in maintaining and improving the UPI system.
However, the Payments Council of India (PCI) maintains that UPI has always been free for consumers since its launch and that any future MDR charges, if introduced, would be commercial arrangements between merchants and payment service providers. These charges would not directly translate into consumer costs. The PCI stated that small merchants and kirana stores would still be protected under the proposed amendment.
Globally, merchant service fees are common in digital payment ecosystems, where businesses pay for transaction processing while consumers continue to rely on convenient, accessible digital payments.
Written by urgent.news from Hindustan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
