India says person-to-person UPI transactions to remain free
New rules may introduce limited, nominal fees for merchants
Highlights:
- UPI processed 2,366 crore transactions in July
- Government rejects claims of external policy influence
- Ministry seeks sustainable model for UPI growth
The Indian government today (8 August) said person-to-person transactions through its Unified Payments Interface (UPI), one of the world's largest real-time payment networks, would remain free for citizens.
The Finance Ministry said in a statement that any future fees on a limited set of merchant transactions would be nominal.
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UPI, launched in 2016-17, is currently functional in 11 countries, while several others have expressed interest in the payment system. It processed 2,366 crore transactions worth Rs29.9 lakh crore ($313.5 billion) in July this year alone.
The ministry reiterated that all person-to-person transactions would continue to be free of charge.
It said that if merchant transaction charges are introduced, they would apply only to a limited number of transactions above a certain threshold and at a nominal rate, significantly lower than those charged by debit or credit cards.
"A vast majority of the transactions will remain free of charge for merchants on UPI. MDR, if introduced, will only be threshold based and not blanketly levied to all," the statement said.
A recent amendment to the Payment and Settlement Systems Act has triggered debate, with some "misinterpreting" it as a move to impose charges on ordinary users, the ministry said.
"In reality, the amendment is an enabling provision designed to ensure UPI's long-term sustainability, technological advancement, and resilience against emerging risks," it added.
The ministry said the exponential growth in transaction volumes required significant and continuous upgrades to UPI's cybersecurity, fraud prevention systems and infrastructure.
Responding to media reports suggesting that external influences may be driving policy changes regarding UPI, the ministry said the claim was "unfounded, completely false and misleading".
"If external pressure had been a factor, the government would not have introduced UPI in 2016 or made it free of charge for both merchants as well as citizens since January 2020," the statement said.
The ministry also highlighted the need to increase competition by encouraging more companies to expand their operations, saying this required a self-sustaining revenue model.
Reliance on subsidies alone is not viable for the next wave of growth, the statement said, adding that a balanced framework is needed to ensure UPI remains robust, inclusive and future-ready.
