No Charges for UPI Users

Key Highlights:

• UPI users will face no transaction charges; Person-to-Person (P2P) transactions remain free.
• Any future Merchant Discount Rate (MDR) will be nominal, threshold-based, and apply only to a limited set of merchant transactions.
• An amendment to the Payment and Settlement Systems Act, 2007 (PSS Act) is an enabling provision for UPI's long-term sustainability.
• The UPI and Services Steering Committee headed by NPCI will decide on MDR if the amendment passes.
• UPI processed 2,366 crore transactions worth ₹29.9 lakh crore in July 2026 and is now live in 11 foreign countries.

Detailed Insights:

• The PSS Act amendment aims to ensure UPI's sustainability, technological advancement, and resilience against emerging risks.
• Exponential transaction volumes necessitate continuous upgrades in cybersecurity, fraud prevention, and infrastructure.
• A self-sustaining revenue model is crucial for market expansion and encouraging competition beyond reliance on subsidies.
• The government reaffirms its commitment to keeping UPI free for citizens while ensuring its future robustness and inclusivity.
• This forward-looking step aims to expand UPI into rural and semi-urban areas and maintain its global competitiveness.
• The government refutes "false narratives" regarding external influences on UPI policy changes, emphasizing its indigenous nature.

Key Concepts Involved:

• Unified Payments Interface (UPI): India's real-time, interoperable digital payment system.
• Merchant Discount Rate (MDR): A fee paid by a merchant to the bank for processing digital transactions.
• Payment and Settlement Systems Act, 2007 (PSS Act): The legal framework governing payment and settlement systems in India.
• National Payments Corporation of India (NPCI): An organization that operates retail payment and settlement systems in India.