India is moving a bill to amend the Payment and Settlement Systems Act [2] to allow banks and service providers to levy charges on UPI transactions.
This legislative shift targets the sustainability of the Unified Payments Interface system. While the government seeks to create a framework for fees, it faces the challenge of maintaining the widespread adoption of digital payments among the general public.
Finance Minister Nirmala Sitharaman said customers will not have to pay any charges on UPI transactions. The bill seeks to amend the Payment and Settlement Systems Act of 2007 [2] to provide the government with the authority to permit banks to levy these charges.
Reports indicate the proposed fee structure may specifically target large-value UPI transactions, such as those exceeding Rs 2,000 [3]. By focusing on higher transaction amounts, the government aims to balance the operational costs of banks without disrupting small-scale retail payments.
There are conflicting reports regarding the current legislative status of the bill. Some reports indicate the Lok Sabha has already passed the legislation [2], while other updates place the bill in the Rajya Sabha [1].
The bill creates a legal mechanism for the government to authorize banks to collect fees. While the Finance Minister said end-users are exempt from these costs, the legislation allows for a shift in how service providers recover the costs of maintaining the digital payment infrastructure [2], [3].
“Finance Minister Nirmala Sitharaman said customers will not have to pay any charges on UPI transactions.”
The move signals a transition from a completely free digital public infrastructure to a hybrid model where high-value transactions may be monetized. While the government is currently shielding consumers from costs, the legislative change provides the legal architecture to shift fees to merchants or service providers to ensure the long-term financial viability of the UPI ecosystem.
