The Unified Payments Interface (UPI) has completed a decade since its launch, becoming the backbone of India's digital payments ecosystem. It has seen exponential growth in transaction volume and value, expanding financial inclusion and setting a global benchmark for real-time payments.
Experts laud the decision to impose a 0.4 per cent Merchant Discount Rate (MDR) on UPI transactions exceeding Rs 2,000, effective October 15. This move, along with a dedicated fund for small merchants, is seen as crucial for creating a sustainable digital payments ecosystem, incentivising expansion in rural areas, and funding innovation while keeping most transactions free for users.
Prime Minister Narendra Modi celebrated the Unified Payments Interface (UPI) completing a decade, calling it a major turning point in India's digital payment journey. Launched in 2016, UPI has become the backbone of India's digital payments ecosystem, showing exponential growth in transaction volume and value, and is a key pillar of the Digital Public Infrastructure.
PhonePe has announced a significant expansion plan to deepen digital payment infrastructure across India's towns and villages. This initiative includes hiring over 20,000 sales personnel and deploying more than 50 lakh payment devices, with a strong focus on rural areas, aiming to bring small merchants into the formal financial ecosystem.
The government is introducing a 0.4% Merchant Discount Rate (MDR) on UPI person-to-merchant payments above Rs 2,000, effective October 15. This move ends the zero-MDR regime, aiming to fund UPI infrastructure and sustainability, as the previous government subsidy was insufficient to cover operational costs. Payments between individuals and most everyday merchant transactions will remain free.
Union Home Minister Amit Shah lauded UPI on its 10th anniversary, highlighting its role in India's digital transformation. Launched by NPCI in 2016, UPI has become the world's largest real-time payment system, witnessing a massive surge in transaction volume and value, demonstrating its success in empowering people with swift, seamless, and secure digital transactions.
Reserve Bank Deputy Governor S C Murmu has highlighted the "cash paradox" where currency in circulation continues to grow despite a significant increase in digital payments. This trend complicates the RBI's forecasting and planning for currency production and distribution, prompting the central bank to seek solutions and explore ways to extend banknote life and reduce the carbon footprint of the cash cycle.
RBI Governor Sanjay Malhotra stated it is "premature" to discuss the implementation of Merchant Discount Rate (MDR) for digital payments, advising a "wait-and-watch" approach. He emphasised that investment in public payment infrastructure is necessary and someone must bear the cost, whether through taxes or MDR. The government is currently working on amendments to relevant statutes, and the RBI is focused on strengthening this infrastructure.
The Lok Sabha has passed a Bill to amend the Payment and Settlement Systems Act, 2007, authorising the government to permit banks and service providers to levy charges on UPI and other electronic payment modes. This move aims to create a sustainable revenue model for the digital payments ecosystem, shifting from the current exemption of UPI transactions from such charges.
J&K Bank MD and CEO Amitava Chatterjee defended the surcharge on UPI transactions above Rs 2,000, stating it is necessary for the system's long-term sustainability. He also discussed the shift of household savings to mutual funds, the bank's profit growth, and India's consumption-based economy.
Two-factor authentication for all digital transactions, including UPI, is now mandatory in India, as per RBI guidelines, to enhance security and curb fraud.
Parliament was informed that UPI has onboarded 55.49 crore users by June 2026, with transactions reaching 24,162 crore in volume and Rs 314 lakh crore in value in FY 2025-26. The platform, operated by NPCI, is expanding internationally through NIPL, facilitating cross-border payments and assisting other nations in building similar systems. Significant efforts are also underway by the Government, RBI, and NPCI to enhance the security and transparency of UPI transactions, including risk-based limits, security frameworks, and public awareness campaigns against cyber-crime.
The Reserve Bank of India (RBI) is developing digital public infrastructure and payments intelligence platforms using artificial intelligence and application programming interfaces to improve customer experience and strengthen the payments ecosystem.
Airpay Payment Services has partnered with Maharashtra State Co-operative Bank (MSCB) to enable UPI-based digital payments across the lender's network in Maharashtra, aiming to accelerate financial inclusion in rural areas.
It will enable real-time intel sharing among banks and other financial sector participants to strengthen customer protection against digital fraud.
About 85 per cent of the digital payment transactions take place through UPI in India, and the country can be a case study in inclusive, secure, and scalable Digital Public Platforms (DPPs), Reserve Bank Governor Sanjay Malhotra has said. He was speaking at a "High-Level Dialogue on Forging Economic Resilience through Digital Public Platforms" organised by RBI on the sidelines of the Annual Meetings of the World Bank and International Monetary Fund in Washington, DC on Tuesday.
Fuel pump dealers in Madhya Pradesh plan to stop accepting UPI payments exceeding Rs 2,000 for petrol and diesel from October 16, citing concerns over the proposed Merchant Discount Rate (MDR). The Confederation of All India Traders (CAIT) has urged the government to reconsider the MDR imposition, warning it could hinder digital payment adoption and impact traders' profits.
Arunachal Pradesh Chief Minister Pema Khandu highlighted that the success of UPI, which handles nearly half of the world's real-time digital transactions, stems from a collaborative ecosystem including financial inclusion, digital identity, and affordable internet. He attributed this digital payments revolution to the vision of PM Narendra Modi.
'The smartphone had become my boarding pass, my digital ID, my train ticket repository, my taxi booking tool and my payment instrument,' says Brijesh Haldia
'The focus needs to shift towards the ability to collect payments, particularly in tier-3 to tier-4 areas where acceptance is still lacking.'
RNFI Services Ltd has received in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator - Physical (PA-P). This approval allows the company to expand its financial infrastructure into physical, offline, and in-store payments, complementing its existing regulated financial services portfolio.
BJP MP Raghav Chadha addressed the 12th IPU Global Conference of Young Parliamentarians in Samarkand, Uzbekistan, highlighting India's digital transformation journey. He emphasised how technology is widening access and promoting inclusion, citing UPI's success, affordable data, and robust data protection laws. Chadha also discussed India's digital cooperation with Uzbekistan and the importance of digital rights, safety, and skill development for all citizens.
Apple has officially launched its Apple Pay service in India, initially partnering with Axis Bank for Visa and Mastercard credit card users. The service allows secure, cashless transactions via iPhone, iPad, and Apple Watch using NFC technology, without requiring PINs or OTPs. This move is set to intensify competition in India's digital payments market, currently dominated by UPI and local players, with Apple planning to onboard more banks and expand merchant networks.
With digital adoption fast gaining currency, India is likely to see retail digital payments double to $7 trillion by 2030 from current levels, a study by Kearney and Amazon Pay said. In the report 'How Urban India Pays', Kearney-Amazon Pay said strong adoption of digital payments in online purchases has potentially led to a permanent shift in consumer behaviours, fuelling offline adoption as well.
The National Payments Corporation of India (NPCI) stated that the Merchant Discount Rate (MDR) "is distributed only amongst the UPI ecosystem, to further invest into infrastructure resilience, innovation, cybersecurity (protecting the UPI infrastructure with banks and non-banks) and customer service."
A report by IIT Bombay suggests that the proposed Merchant Discount Rate (MDR) framework for Unified Payments Interface (UPI) transactions needs rationalisation before implementation to safeguard public trust in the digital payments system, highlighting that UPI's long-term economic benefits outweigh potential incremental income from merchant fees.
India's MSME sector faces a significant formal credit gap of approximately Rs 60 lakh crore, with traditional channels meeting only a fraction of the demand. A new report suggests that a centralised, interoperable digital layer could effectively bridge this gap and enhance productivity across the formal business sector by digitising workflows and enabling cash-flow-based underwriting.
India is actively integrating payment system harmonisation into its Free Trade Agreement (FTA) negotiations, especially with countries hosting a large Indian diaspora. This strategy aims to leverage India's growing fintech ecosystem, facilitate cross-border financial services, and position India as a global hub for financial services exports, particularly through platforms like GIFT City.
Prime Minister Narendra Modi celebrated 11 years of the Digital India initiative, highlighting its role in redefining governance, empowering citizens, and accelerating all-round development. He emphasised its impact on digital payments, direct benefit transfers, and expanding digital public infrastructure, making technology a powerful instrument for 'Ease of Living' across India, including tier-2 and tier-3 cities.
The Payments Council of India has confirmed that Unified Payments Interface (UPI) services will continue to be free for consumers and small merchants, despite a recent Lok Sabha Bill. This clarification addresses concerns about potential charges, emphasising that while a sustainable financial model for UPI infrastructure is being developed, transaction charges will not be passed on to users or small businesses.
The Indian government has clarified that consumers will not be charged for UPI transactions, and most merchant transactions will also remain free. This comes amidst speculation following an amendment to the Payment and Settlement Systems Act, 2007. Any future merchant discount rate (MDR) would be nominal, threshold-based, and aimed at ensuring UPI's long-term sustainability and infrastructure development.
The All India Mobile Retailers Association (AIMRA) has announced a nationwide 'No UPI Day' protest on October 2 against the proposed 0.4 per cent Merchant Discount Rate (MDR) on UPI transactions exceeding Rs 2,000. Retailers argue that this charge will burden small businesses and impact their already thin profit margins, urging policymakers to withdraw the proposal.
Finance Minister Nirmala Sitharaman announced that the Goods and Services Tax (GST) Council's October 7 meeting will focus on 'GST 2.0' process reforms, including e-invoicing and input tax credit rules, while also addressing complex issues surrounding the taxation of the digital economy and cryptocurrency.
PhonePe, at the Global Fintech Fest 2026, unveiled its strategic vision for the next decade, focusing on inclusive digital progress for individuals, households, and businesses across India. The roadmap details innovations in financial inclusion, wealth creation, credit access, and merchant solutions.
The Reserve Bank of India (RBI) on Wednesday issued a draft framework for alternative authentication mechanism for digital payments, wherein it has mandated that all digital payment transactions would have to be authenticated with an additional factor of authentication (AFA), except small value contactless card payments for up to Rs 5,000 at point of sale terminals, e-mandates for recurring transactions, and small value digital payments through offline mode, among others. Additionally, it has said that all digital payment transactions, other than card present transactions, have to ensure that one of the factors of authentication is dynamically created, i.e., the factor is generated after initiation of payment; is specific to the transaction; and cannot be reused.
RBI Deputy Governor S C Murmu stated that the introduction of merchant discount rate (MDR) on UPI transactions is unlikely to cause a shift back to cash, despite some concerns, emphasising that MDR will help the payments ecosystem recover costs.
Former NITI Aayog vice-chairman Rajiv Kumar has urged the government to maintain zero-fee UPI transactions for several more years, arguing that the benefits of UPI as a public good outweigh the costs. This comes amidst the government's recent decision to introduce a 0.4% fee on person-to-merchant UPI transactions above Rs 2,000 from October 15, a move that has drawn criticism.
Economic think tank GTRI has urged the Indian government to withdraw the proposed UPI charges, set to begin on October 15, arguing that the digital payment system should remain free for merchants and consumers. GTRI warns that these charges could lead to higher prices, reduced earnings for small businesses, and weakened household demand, while also benefiting international card networks by eroding UPI's price advantage. The think tank also called for an independent audit of UPI's running costs.
The Reserve Bank of India (RBI) has endorsed the introduction of a Merchant Discount Rate (MDR) on UPI transactions exceeding Rs 2,000, effective October 15. This move, which levies a 0.4 per cent fee on merchant payments above the threshold, aims to bolster the long-term sustainability and growth of India's digital payments ecosystem. The RBI clarified that person-to-person (P2P) transactions and small person-to-merchant (P2M) payments below Rs 2,000 will remain free for users, ensuring no direct charge on customers.
Apple Pay has officially launched in India, integrating with CCAvenue and partnering with Axis Bank to bring secure and convenient mobile payment solutions to millions of iPhone, iPad, and Apple Watch users across a vast network of merchants.
