Says no fees for consumers and small-time vendors
New Delhi: Unified Payments Interface or UPI payments remain free for consumers, and any future merchant charges (MDR) will apply only to certain categories of merchant transactions, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Monday.
Allaying apprehensions in certain sections that charges may be imposed on UPI transactions, the minister asserted that the vast majority of merchant transactions, including low-value transactions to roadside vendors, will continue to remain free.
She was replying to discussion on The Taxation and Other Laws (Amendment) Bill, 2026, which the Rajya Sabha returned with a voice vote to the Lok Sabha, thus completing the parliamentary process.
The minister said the proposed legislation aims to amend Section 10A of the Payment and Settlement Systems Act, 2007. The amendment is an enabling provision, and it does not impose any tax or transaction charge on UPI users, she said.
Sitharaman said the bill enables the government to specify, through notification, the electronic payment modes that will continue to receive statutory protection against charges.
Once the bill is passed by Parliament, the UPI and Services Steering Committee headed by NPCI will consider and decide whether any MDR should be introduced and, if so, its scope and structure, she said in her reply. Therefore, no Merchant Discount Rate (MDR) framework has yet been finalised, she said.
“Will consumers pay any UPI charge? No, consumers will not have to pay any charges on UPI transactions. UPI has remained free for consumers since its launch, and every Indian will continue to make instant digital payments without paying a transaction charge,” Sitharaman said.
Unified Payments Interface or UPI was launched in 2016. Sitharaman said small merchants remain central to the government’s commitment to financial inclusion and UPI’s inclusive growth.
“The vast majority of merchant transactions, including ordinary, low-value transactions, will continue to remain free. Any future MDR will apply only to a limited category of merchant transactions above a prescribed threshold,” the Finance Minister said.
Sitharaman said the world’s largest real-time payment system belongs to India, and in July 2026 alone, the country processed 2,366 crore UPI transactions worth Rs 29.9 lakh crore. She also informed members that charges on digital transactions have been in several countries, including the US, Japan and China.
“It’s because of the UPI transactions being done by the SVANidhi merchants, redi-patriwalas, that UPI has become so big,” she added.
In an apparent swipe at P Chidambaram, Sitharaman said the former finance minister of India and his allies were making fun of UPI when it was introduced, questioning the country’s ability to make it successful. “Today, UPI is available across 11 countries,” she said.
The Finance Minister also attacked CPI-M member John Brittas, who claimed that the government has decided to charge fees on UPI payments due to pressure from the US and walked out of the House before listening to her reply.
At present, banks and payment system providers cannot directly or indirectly charge users for payments made through UPI and RuPay debit cards. The bill proposes allowing the central government to decide, through notification, which electronic payment modes or transactions must remain free.
