UPI stays free for users, vast majority of transactions to remain free for merchants as well, says government
The government said any future merchant discount rate (MDR), if introduced, would apply only to a limited set of merchant transactions above a specified threshold and at a nominal rate, which would be lower than typical debit and credit card MDRs
The Indian government has clarified that the Unified Payments Interface (UPI) will remain free for users and that the vast majority of merchant transactions will also continue to be fee-free. This comes after a recent amendment to the Payment and Settlement Systems Act, 2007, sparked debate over potential fees for UPI transactions.
The government emphasized that any future merchant discount rate (if introduced) would only apply to a limited set of high-value merchant transactions above a specified threshold, at a lower rate than typical debit and credit card fees. All person-to-person UPI transactions will remain free. The clarification follows concerns that the amendment may lead to charges on UPI transactions, but the government stated that the proposed change to Section 10A of the law is an enabling provision and does not itself impose fees.
If the UPI and Services Steering Committee, chaired by the National Payments Corporation of India (NPCI), decides to implement an MDR, it will be threshold-based rather than applied to all transactions. The government aims to create a sustainable revenue model for UPI as transaction volumes increase, requiring ongoing investment in cybersecurity, fraud prevention, and payment infrastructure.
Written by urgent.news from The Hindu's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
