Amid speculation over possible UPI transaction charges, the Payments Council of India clarified that UPI will remain free for consumers and small merchants.
Amid growing speculation over the possibility of charges on Unified Payments Interface (UPI) transactions, the Payments Council of India (PCI) has issued a clarification, stating that consumers and small merchants will continue to use UPI without paying any transaction fees.
In a post on X, the industry body sought to address what it described as misconceptions surrounding merchant discount rate (MDR) and UPI charges, emphasising that no proposal seeks to impose fees on individual users or small shopkeepers.
Consumers will continue to use UPI for free
The PCI said UPI has remained free for consumers since its launch in 2016 and there is no change in that position. It reiterated that every Indian can continue making instant digital payments without paying transaction charges.
No MDR for small merchants
The council also clarified that small merchants, including kirana stores, are not required to pay Merchant Discount Rate (MDR) for accepting UPI payments. It said the platform was designed to make digital payments accessible even for the smallest businesses, and protecting small merchants remains central to the ecosystem.
Why the discussion over UPI charges?
According to the PCI, the ongoing debate is not about charging consumers but about ensuring the financial sustainability of the country’s rapidly expanding digital payments infrastructure.
More from BusinessUPI has evolved into the world’s largest real-time payment system, processing billions of transactions every month. The council said discussions are centred on how to support continued investments in technology, cybersecurity, fraud prevention and infrastructure while keeping consumers and small businesses protected.
Who bears the cost?
The PCI noted that banks, payment companies, fintech firms, the National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI) have collectively invested in building and maintaining the UPI ecosystem over the past decade.
It said the operational costs of running the payment network—including technology, cybersecurity, compliance, customer support and innovation—are currently borne by ecosystem participants such as banks and payment service providers.
Will consumers pay if large merchants are charged?
The council clarified that even if merchant service charges apply to certain large merchants, they are commercial arrangements between merchants and payment service providers and do not translate into transaction charges for consumers.
It added that merchant service charges are a common feature of digital payment ecosystems globally, while consumers continue to enjoy free and convenient digital payment services.
