The Finance Ministry dismissed claims of external pressure shaping the UPI fee framework, stating that all digital payment policies reflect domestic priorities.
Consumer payments and person-to-person transfers across India remain entirely free of charge regardless of the transaction amount.
Merchants receiving up to Rs 1 lakh per month via QR codes retain zero merchant discount rate protection, covering over 95 per cent of merchant transactions.
The Finance Ministry on Wednesday rejected claims that foreign pressure drove changes to the UPI fee framework. It stated that the revision reflects domestic priorities and not outside influence, and denied allegations that foreign actors shaped policy on merchant charges for high-value digital payments.
The ministry stated on X: “Debunking the ‘External Pressure’ Myth: Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” as reported.
Consumer Charges Remain Zero
Everyday users will not pay. The digital payment system remains free for consumers across India. Sending money to friends, settling bills at local shops and scanning QR codes still carries no customer fee. Person-to-person transfers remain zero-rated, no matter the amount.
The revised framework does not cover ordinary day-to-day commercial payments. Merchants receiving up to Rs 1 lakh a month through QR codes remain under a zero merchant discount rate protection net, and more than 95 per cent of merchant payments are below Rs 2,000.
Only commercial transactions above Rs 2,000 will face a 0.4 per cent charge, which merchants must bear. Commercial banks have been told not to let merchants pass MDR costs on to consumers. UPI apps cannot add separate platform fees.
Merchant Fee Rules
Some categories carry tighter caps. Payments above Rs 2,000 for railway bookings, fuel stations, telecom services, utility bills and insurance will be charged at a flat rate capped at Rs 5 per transaction. Mutual fund investments and securities transactions will attract 0.02 per cent, capped at Rs 300.
Backend Funding Push
The ministry linked the move to UPI's rapid expansion in India since 2016 and the need to keep backend systems funded. The network processed 24.5 billion transactions in August 2026 alone.
“To keep this system self-sustainable, secure and innovative, a small fee on high-value merchant transactions helps fund: better infrastructure and cybersecurity, support for small merchants in Tier III–VI towns and rural areas, and awareness and incentives to expand UPI adoption,” the Ministry added.
The government stated that the new structure is designed to channel revenue from higher-value merchant transactions back into support for small businesses and wider digital payments adoption. “The new framework ensures resources from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the country,” the Ministry of Finance stated.
