UPI to stay free for users; nominal MDR only for some merchants
The Finance Ministry has clarified that UPI will remain free for users: paying customers face no transaction charge and all person-to-person transfers stay free. A nominal merchant discount rate may apply only to a limited number of merchant transactions above a threshold, far below debit or credit card MDR. The clarification follows Parliament’s Taxation and Other Laws (Amendment) Bill, 2026, amending Section 10A of the Payment and Settlement Systems Act, 2007.
Nabka Insight
Charging policy for India’s flagship digital-payment system, tied to a specific statutory amendment, is exam-relevant.
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- Users pay no charge; all person-to-person UPI transfers remain free.
- Any MDR is threshold-based, on some merchant transactions only, well below card MDR.
- Follows amendment to Section 10A of the PSS Act, 2007 via the 2026 Bill; NPCI-led committee to decide MDR.
Background
Relevant forBanking · SSC · State PSC · UPSC