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Will UPI payments be free in India as new bill passes? Council clarifies
The Payments Council of India have issued a clarification after a new bill allowing MDR charges was passed
- PUBLISHED: Sat 8 Aug 2026, 12:25 PM
Discussions on possible charges being levied on individuals for using UPI to make payments in India have taken social media by storm.
The Merchant Discount rate which imposes charges on merchants using UPI to receive payments, has been waived since 2020. However, a new bill may allow the government to levy those charges.
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This new amendment has confused the general public with regard to the new policies being implemented, prompting the Payments Council of India to issue a clarification.
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In a post on X, the body said that "Every Indian can continue making instant digital payments without paying any transaction charges", adding that UPI has always been free for consumers since its launch in 2016.
It further added that small merchants will not be affected to accept UPI payments to ensure digital payments remain accessible for even the smallest businesses.
Why has the amendment been introduced?
The UPI system has been funded by investments from banks, payment companies, fintechs, and authorities for the last 10 years.
In order to support the expanding ecosystem, the government is now looking at applying merchant service charges for large merchants. Merchant service charges, where applicable, are commercial arrangements between merchants and payment service providers.
While customers do not have to bear the cost of this charge, individuals have expressed concern online that this may trickle down to them.
