New Delhi: The latest decision by the government on UPI charges has casted confusion over UPI users, many of which are Indians and use UPI daily. A simple question is being asked by a lot of people whether “Will I have to pay any fee for UPI payment?
Now, the Finance Minister Nirmala Sitharaman has said that regular users of the UPI will not be charged the proposed Merchant Discount Rate (MDR). This potential charge would be levied against merchants and not customers.
What has actually changed?
The Lok Sabha has approved the Taxation and Other Laws (Amendment) Bill, 2026, which modifies the provisions on charges on certain digital payment transactions. This does not, however, imply a UPI charge has been immediately implemented.
Sitharaman added that the government has yet to make a final decision on introducing MDR on UPI. Once the Bill goes through the parliamentary process, it will be discussed by a committee under the National Payments Corporation of India (NPCI).
The Merchant Discount Rate (MDR) is the fee paid by the merchant when they process a digital payment. This is the government’s new clarification that if this fee isn’t avoided by UPI, it would not be charged directly to the customers, but the merchants themselves.
What does this mean for normal UPI users?
If anyone is using UPI to transfer money to the close individuals such as family, friends no change is implemented immediately. The users will still be able to use UPI even without the need to declare new customer fee.
For instance, when you remand ₹1,000 to the family member using UPI, the government has not revealed that you’ll need to pay an extra UPI fee for the transaction.
It’s the same for most consumers as well when they make digital payments. The main thing to remember is that the proposed MDR targets merchants, and never the individual making the payment.
Could customers still feel the impact indirectly?
This is where things could become more complicated.
In the future, if certain UPI payments come with a merchant fee, there is a possibility that merchants may pass on the extra cost on to customers through higher prices or other kinds of charges. For now, though, no one has said merchants will be allowed to or forced to pass the fee, as a tax, on to the customer.
The government believes a possible MDR can support banks and fintech firms as they invest more in the payment infrastructure as well as technology and security.
What should UPI users do now?
If you are the typical user, don’t worry about changing anything at this time. However, the government has made it clear that the proposed MDR would not be levied on customers and UPI continues to be usable as before.
If MDR is implemented in the future, the bigger change is likely to be with businesses receiving UPI payments in the first place. The exact rate that may apply to transactions and what payments may be free vs charge are not yet decided.
Thus, for now, in spite of all the fuss on “UPI charges”, the common man need not be concerned with paying a new fee each use. Finalization of the rules by the government and the committee concerned will yield clarity.
