UPI charges: No fees on person-to-person payments, Finance Ministry clarifies

The government on Saturday, August 8 clarified that users will not be charged for person-to-person (P2P) transactions conducted through the Unified Payments Interface (UPI), amid concerns over possible fees being introduced for digital payments.

The Finance Ministry said individuals can continue to send and receive money through UPI without incurring any charges. The clarification comes following speculation that proposed amendments to the Payment and Settlement Systems Act, 2007, could lead to charges being imposed on UPI users.

The ministry, however, said a merchant discount rate (MDR) could potentially be introduced in the future for a limited category of merchant transactions. Any such charge, if implemented, would apply only to transactions above a specified threshold and would be kept nominal.

The government stressed that there would be no blanket MDR on all merchant payments. It also said any proposed MDR would be significantly lower than the charges currently applicable to debit and credit card transactions.

The proposed amendments are part of the Taxation and Other Laws (Amendment) Bill, 2026. The government said the provision relating to UPI is intended to enable the long-term sustainability, technological development and resilience of the digital payments ecosystem, rather than impose charges on users.

Once Parliament approves the proposed changes, any decision on MDR will be taken by a steering committee led by the National Payments Corporation of India (NPCI).

The Finance Ministry said the rapid expansion of UPI has increased the need for sustained investment in payment infrastructure, cybersecurity and fraud-prevention mechanisms.

UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 alone, underscoring the scale of its adoption in India. The digital payment system is currently operational in 11 countries, while several other countries have expressed interest in adopting or integrating the platform.

The government also rejected reports suggesting that external factors were influencing policy decisions on UPI, describing such claims as misleading and unfounded.