Will UPI Transactions Attract Charges? Here’s What the New Law Says

Social media has been abuzz with claims that users may soon have to pay charges for making payments through UPI. However, the Central Government has clarified that no charges are currently being imposed on UPI transactions.

The confusion follows a recent amendment to the Payment and Settlement Systems (PSS) Act, 2007, which has led to speculation that UPI payments could become chargeable. The Press Information Bureau (PIB), however, has clarified that the amendment does not introduce any immediate fees for UPI users.

What did the government clarify?

According to the PIB, people currently using UPI do not have to pay any transaction charges. The recent amendment does not automatically introduce a fee for UPI payments.

Instead, it gives the government greater flexibility to determine, through official notifications, whether charges should apply to specific digital payment systems or categories of transactions in the future.

What has changed in the law?

The amendment concerns Section 10A of the Payment and Settlement Systems Act, 2007. The earlier provision placed certain restrictions on collecting the Merchant Discount Rate (MDR) for specified digital payment methods.

With the amendment, the government can now decide which digital payment methods or transaction categories may attract charges and which should remain exempt.

This does not mean that charges have already been introduced. Any future charge would require a separate decision and official notification.

Will UPI users have to pay now?

No. UPI transactions remain free for users at present.

The amendment only creates a legal framework that could allow charges to be introduced for certain types of transactions in the future, if the government decides that such a move is necessary.

What about small merchants and P2P transactions?

The current position is that peer-to-peer (P2P) transactions and payments involving small merchants will continue to remain free.

There has been speculation that a nominal MDR could potentially be considered for high-value transactions involving large businesses. However, no such charge has been introduced for UPI users at present.

What does this mean for UPI users?

The key point is simple: the recent amendment does not mean that UPI charges have been introduced. People can continue to use UPI for their regular payments without paying a transaction fee.

The amendment provides the government with the authority to decide on charges for specific digital payment methods or transaction categories in the future. Any such change would need to be formally notified.

For now, UPI remains free for the general public.