UPI Charges Explained: Centre Says Person-To-Person Payments Will Remain Free

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, by voice vote on August 6, followed by the Rajya Sabha on August 10.

President Droupadi Murmu subsequently gave her assent to the Bill, turning it into law.

The legislation amends Section 10A of the Payment and Settlement Systems Act, 2007.

The Centre has, however, reassured users that person-to-person transactions will remain free of charge.

The Finance Ministry said in a statement that users would not have to pay any charges and most transactions would remain free for customers.

According to the Ministry, if introduced, Merchant Discount Rate (MDR) would apply at a nominal rate to certain merchant transactions above a specified threshold.

The amendment to the Payment and Settlement Systems Act aims at strengthening UPI’s long-term operational sustainability, technological capabilities and ability to tackle emerging threats, the Ministry said.

As transaction volumes increase, continued investment in cybersecurity, fraud prevention, technology and infrastructure will be required, the Ministry stressed.

The Ministry further highlighted UPI’s growing importance to India’s digital payments infrastructure.

UPI transaction volumes continue to surge. In July, the platform processed 2,366 crore transactions worth ₹29.9 lakh crore.

The world’s largest real-time payment system is now available in 11 countries. Its expanding scale requires significant annual investment in operations, technology and infrastructure.

Most UPI transactions are small-value payments of around ₹30–40.

While only 4% of transactions are above ₹2,000, they account for nearly two-thirds of the total transaction value.

Charging for small-value transactions could push workers, drivers and other low-income users back towards cash, undermining the broader objective of India’s digital economy.

The question, however, remains: who will bear the rising cost of operating the UPI ecosystem? Policymakers and industry stakeholders have raised the issue of who should ultimately bear these costs.

Until now, UPI and RuPay debit card transactions have not attracted such charges. The amendment removes that statutory protection, allowing the government to prescribe charges for certain payment transactions.

The Finance Ministry has reassured users that small-value transactions will not attract charges, while the MDR framework is yet to be finalised.

The key uncertainty, therefore, is not whether UPI will suddenly become a paid service. It is who will ultimately bear the cost of maintaining and expanding the country’s massive digital payments infrastructure.

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