Key Points of the UPI Fee Clarification
The Ministry of Finance announced on 8 August 2026 that ordinary users will continue to enjoy free UPI transactions. Any future MDR will be limited to a small set of merchant payments above a defined threshold and will be lower than typical card‑based rates.
Key Developments
- All person‑to‑person UPI payments remain free for consumers.
- Future MDR, if introduced, will apply only to merchant transactions exceeding a specified amount and at a nominal rate.
- The amendment to the PSS Act is an enabling provision, not a direct charge.
- After passage of the Taxation and Other Laws (Amendment) Bill, 2026, the NPCI-led UPI and Services Steering Committee will decide on any MDR.
- The move aims to create a sustainable revenue model for the rapidly growing digital payments ecosystem.
- In July 2026, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore and is live in 11 foreign countries, with more nations showing interest.
Important Facts
• UPI was launched in 2016‑17 and has become the world’s largest real‑time payment system.
• The government emphasizes that the amendment is not meant to burden ordinary users but to fund cybersecurity, fraud‑prevention, and infrastructure upgrades.
• Reliance on subsidies alone is deemed unsustainable for the next wave of digital payment growth.
Exam Relevance
This development touches upon several GS topics: GS3 – Economy (digital payments, financial inclusion, fintec