A high-level committee is poised to determine new charges for UPI transactions exceeding Rs 2,000 to merchants, a move that could reshape India's digital payment landscape while ensuring low-value transactions remain free for consumers.
Key Points
- A 22-member committee will soon decide on charges for UPI payments above Rs 2,000 made to merchants.
- All person-to-person UPI transactions and person-to-merchant transactions up to Rs 2,000 will continue to be free.
- The potential charges, known as Merchant Discount Rate (MDR), are being considered for self-sustainability and market expansion, with global examples like Brazil and China cited.
- Finance Minister Nirmala Sitharaman clarified that any future MDR would apply only to a limited category of high-value merchant transactions, ensuring low-value transactions remain free.
- UPI, operated by NPCI, has seen massive growth in India and is now accepted in 11 countries, transforming the digital payments landscape.
A panel comprising representatives of banks, service providers and various associations would soon take a call on charges to be levied on UPI payments above Rs 2,000 to merchants.
The UPI & Services Steering Committee has 22 members, including Indian Banks' Association (IBA) and Payments Council of India (PCI).
Understanding The Proposed UPI Charges
According to sources, the committee would soon take decision on Merchant Discount Rate (MDR) on UPI transaction above Rs 2,000 based on various factors including self-sustainability and market expansion.
For example, merchant charge in Brazil's PIX ecosystem is around 0.33 per cent, while in China, such charge is 0.40 per cent.
The government on Monday said that UPI transactions, including through RuPay debit cards, up to Rs 2,000 from person to merchant are free. All person-to-person UPI transactions will also continue to be free.
As per a gazette notification dated September 14, no bank or system provider would impose, whether directly or indirectly, any charge on a person making or receiving a payment through RuPay debit card or UPI transaction of up to Rs 2,000.
Government Clarifies Stance On UPI Fees
Reacting to the development, Opposition Congress on Tuesday attacked the government over its notification on UPI transactions, saying it has quietly paved the way for imposing fees on such transactions.
The notification follows an amendment to section 10 A of the Payment and Settlement Systems Act, 2007, which provides an enabling framework for imposing an MDR on payments through UPI and other notified electronic payment modes.
The amendment bill was passed by Parliament during the Monsoon Session in August this year.
While replying to a debate in Parliament on the Bill, Finance Minister Nirmala Sitharaman had said UPI payments would remain free for consumers, and any future charges will apply only to certain categories of merchant transactions.
Allaying apprehensions in certain sections that charges may be imposed on UPI transactions, the minister had asserted that the vast majority of merchant transactions, including low-value transactions to roadside vendors, will continue to remain free.
"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.
UPI's Growth And Global Reach
Sitharaman had 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.
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association. It runs real-time payments between individuals and enables customers to make payments directly to merchants while making purchases.
As far as overseas presence is concerned, UPI is now accepted in 11 countries, with Uzbekistan being the latest entry.
The other countries where UPI is accepted are Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece.
UPI, launched on August 25, 2016, has transformed India's digital payments landscape, with transaction value surging from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, a more than 4,000-fold increase over the decade.
