UPI will stay free for users, some merchants may face small fees later: Centre

The Government of India on Saturday said that users will not have to pay any transaction charges for making payments through the Unified Payments Interface (UPI), while a nominal Merchant Discount Rate (MDR) could be introduced for a limited set of merchant transactions in the future.

The statement comes a day after the Lok Sabha passed a Bill to amend the Payment and Settlement Systems Act, 2007, which authorises the government to permit banks and other service providers to levy charges on payments through UPI and other notified electronic payment modes.

The



Ministry of Finance said Person-to-Person (P2P) UPI transactions will continue to remain completely free. It also stressed that the vast majority of merchant transactions will remain free of charge.

According to the government, if MDR charges are introduced, they will apply only to a limited set of merchant transactions above a certain threshold. The charges will be nominal and significantly lower than the MDR applicable to debit or credit card transactions. The government said MDR, if introduced, will be threshold-based and will not apply blanketly to all UPI transactions.