India Clarifies UPI Fees Stay Free for Users as Rs2,000 Merchant MDR Debate Persists
Updated
Updated · FW News · Aug 15
India Clarifies UPI Fees Stay Free for Users as Rs2,000 Merchant MDR Debate Persists
3 articles · Updated · FW News · Aug 15
Summary
Ordinary UPI users will not face transaction fees, the government said, adding person-to-person transfers stay free and any future MDR would be limited to a narrow set of merchant payments.
The clarification follows concern that the Taxation and Other Laws (Amendment) Bill, 2026 creates legal room for charges to return, with one reported model targeting payments above Rs2,000 to large merchants.
Most merchant transactions would still remain free and any MDR would be nominal, the Finance Ministry said, even as higher-value merchant payments represent a much larger share of UPI value than volume.
Rs2,000 crore was allocated in Budget 2026-27 to subsidize low-value UPI and RuPay transactions, underscoring the funding strain as banks, processors and fintechs keep spending on cybersecurity, fraud controls and capacity.
The broader dispute now centers on who should fund UPI's growth without letting narrow charges spread or get passed on to consumers, risking trust in a system that has become near-public infrastructure.