UPI stays free; select merchants may pay MDR
The government announced on Saturday that UPI users will not incur any transaction charges. Any potential merchant discount rate (MDR) will only apply to a select group of merchants exceeding a specific threshold. All person-to-person transactions will remain free of charge. Most merchant transactions are also expected to stay free.
If implemented, the MDR would be threshold-based and impose a minimal fee on a limited set of merchant transactions. The proposal, part of the Taxation and Other Laws (Amendment) Bill 2026, aims to secure UPI's long-term sustainability and technological advancement. The amendment will allow the UPI and Services Steering Committee, chaired by NPCI, to decide on the MDR, if any.
The government introduced UPI in 2016 and kept it free for both merchants and citizens since January 2020.
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