New Delhi: The government on Saturday clarified that users will not be charged for UPI transactions, while a nominal, threshold-based Merchant Discount Rate (MDR) could be introduced for a limited category of merchant payments in the future.
The Finance Ministry said person-to-person (P2P) UPI transactions will remain completely free, while the vast majority of merchant transactions will also continue without charges.
If introduced, MDR would apply only to selected merchant transactions above a specified threshold and would be significantly lower than rates charged on debit and credit card payments.
The clarification came a day after the Lok Sabha passed a Bill amending the Payment and Settlement Systems Act, 2007, enabling the government to permit charges on UPI and other notified digital payment modes.
The government said the amendment is intended to support UPI’s long-term sustainability amid rapidly rising transaction volumes and growing requirements for cybersecurity, fraud prevention and infrastructure upgrades.
It also aims to encourage greater private-sector participation and competition in digital payments.
Congress leader Jairam Ramesh, however, questioned the assurances, arguing that merchants could eventually pass MDR costs to consumers through higher or differential prices.
The government also rejected claims of external influence, calling them “unfounded, completely false and misleading”, and said UPI remains an Indian innovation committed to keeping payments free for citizens.
