Tech Desk: In a significant clarification, the Indian government has assured users that UPI transactions will remain free for consumers, dispelling recent concerns about potential fees. While individuals will continue to enjoy seamless, charge-free digital payments, a nominal Merchant Discount Rate (MDR) may be introduced for a limited set of merchant transactions exceeding a specific threshold. This potential charge, if implemented, would be considerably lower than existing debit or credit card MDRs.

The move follows the Lok Sabha’s passage of a Bill to amend the Payment and Settlement Systems Act, 2007, which empowers the government to permit such levies. However, the exact rate and transaction threshold for this potential merchant MDR are yet to be finalized. The UPI and Services Steering Committee, headed by NPCI, will be responsible for determining these specifics once the Taxation and Other Laws (Amendment) Bill, 2026, is passed by Parliament.

The Centre emphasizes that this amendment aims to bolster the sustainability of India’s robust digital payments infrastructure, facilitating further expansion, especially into rural and semi-urban areas. UPI continues its phenomenal growth, processing an astounding 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 alone, cementing its position as the world’s largest real-time payment system. Citizens are advised to rely solely on official information from the Ministry of Finance, RBI, and NPCI.