Recently, it was revealed that the Lok Sabha has passed a Bill proposing an amendment to the Payment and Settlement Act (PSS Act), which authorises the government to permit banks and other service providers to levy charges on payments through UPI and other notified electronic payment modes. This news was widely spread online, with some users and media reports speculating that the government is planning to impose fees on all UPI transactions.
Well, the speculation spread like wildfire and started raising concerns among the people. The Indian government has now finally put an end to all the speculation by issuing a clarification on the matter.
No Charges for UPI users
The government has stated that consumers making payments will not face any transaction charges. All person-to-person transactions will continue to be free of charge.
The amendment is said to be an enabling provision that is designed to ensure UPI’s long-term sustainability, technological advancement, and resilience against emerging risks. With exponential transaction volumes, the system requires significant and continuous upgrades in cybersecurity, fraud prevention and infrastructure. The amendment is said to be necessary for market expansion and self-sustainability.
Regarding the false narratives, it was stated that “The amendment should therefore be viewed in the context of the Government’s broader objective of ensuring that India’s digital payment infrastructure remains sustainable, competitive, innovative and capable of serving the country’s rapidly expanding digital economy.”
Further, it was mentioned that as and when Merchant Discount Rate (MDR) charges are introduced, they will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs. MDR, if introduced, will only be threshold-based and not blanketly levied on all.
It is revealed that once the Parliament passes the Taxation and Other Law (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007, the “UPI and Services Steering Committee” headed by NPCI will decide on MDR, if any.
The vast majority of the transactions will remain free of charge for merchants on UPI. The citizens are requested to rely only on official information from the Ministry of Finance, the Reserve Bank of India and NPCI, and not to forward unverified messages.
