Govt says MDR charges on UPI transactions will be nominal as and when introduced

New Delhi, Aug 8: Against the backdrop of widespread concerns, the government today insisted that the MDR charges on UPI payments, as and when introduced, 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.

It said consumers making UPI payments will not face any transaction charges and all Person-to-Person transactions will continue to be free of charge.

“Vast majority of the transactions will remain free of charge for merchants on UPI,” the government said in an official statement, issued against the backdrop of widespread anxiety and criticism over the move that is likely to impact crores of people.

The statement said the issue of MDR will be decided by “UPI and Services Steering Committee” headed by NPCI after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007.

The government said the amendment is “designed to ensure UPI’s long-term sustainability, technological advancement, and resilience against emerging risks.”

It said, “With exponential transaction volumes, the system requires significant and continuous upgrades in cybersecurity, fraud prevention, and infrastructure.”

The government also said that it was “necessary to increase competition by encouraging more companies to expand their operations, which requires a self-sustaining revenue model.”

It added, “Reliance on subsidies alone is not viable for the next wave of growth. A balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready.”

Talking about the growth of UPI, the government said 2,366 crore such transactions worth ₹29.9 lakh crore were processed in July 2026 alone.

UPI is now also live in 11 foreign countries, and many other countries have shown interest. (BVI)