India's Finance Ministry confirmed that person-to-person UPI transactions will remain free for customers [1, 2].
The clarification comes as a response to ongoing debates over the Merchant Discount Rate (MDR). Because UPI has become the primary method of payment for millions of citizens, any change to the fee structure could significantly impact daily commerce and financial inclusion across the country.
A Finance Ministry spokesperson said, "Customers will not have to pay transaction fees for UPI payments" [1]. The government is addressing the renewed debate over who bears the cost of these digital transactions while attempting to reassure the public that basic usage will not be monetized [3, 4].
While consumer payments are protected, the government is considering limited fees for specific business use cases. The spokesperson said, "If a fee is introduced, it would apply only to select merchant transactions above a specified threshold, rather than regular UPI payments made by customers" [1].
This policy stance supports a system that has seen massive growth in volume. In June, UPI processed 22.72 billion transactions [3], which totaled ₹28.92 trillion in value [3]. This volume represents an average of 757 million transactions per day [3].
The debate centers on the sustainability of the current model, where payment firms often operate without a merchant fee, and how to balance the needs of the financial infrastructure with the goal of keeping digital payments accessible to the general public [3, 4].
“"Customers will not have to pay transaction fees for UPI payments."”
The Indian government is attempting to maintain the rapid adoption of digital payments by shielding the end-user from costs. By targeting only high-value merchant transactions for potential fees, the ministry aims to create a sustainable revenue stream for payment providers without discouraging the small-scale digital economy that defines the current UPI ecosystem.
