UPI Will Stay Free For Consumers And Small Merchants, Payments Council Of India Clarifies

Home / News updates UPI Will Stay Free For Consumers And Small Merchants, Payments Council Of India Clarifies X No Charges on UPI for Consumers or Kirana Stores, Clarifies Payments Council of India Amid confusion over a new law allowing payment charges, the Payments Council of India has clarified that UPI will remain free for consumers and small merchants, including kirana stores. The Payments Council of India (PCI) on Friday clarified that UPI transactions will continue to be free for consumers and that small merchants, including neighbourhood kirana stores, will not be charged for accepting digital payments. The statement came a day after the Lok Sabha passed a bill empowering the government to permit charges on certain electronic payment transactions, a development that triggered confusion and political sparring over whether ordinary UPI users would soon have to pay for a service they have used free of cost since 2016. "UPI will continue to remain free for consumers," the authority said, adding that small merchants will not be charged for accepting digital payments. The clarification was aimed at the millions of shopkeepers and everyday users who rely on UPI for daily transactions, many of whom had grown anxious after reports suggested the government was weighing a Merchant Discount Rate, or MDR, on UPI payments. The confusion traces back to the Taxation and Other Laws (Amendment) Bill, 2026 , which seeks to amend the Payment and Settlement Systems Act, 2007 . The legislation, piloted by Finance Minister Nirmala Sitharaman, was passed by voice vote and gives the government legal room to permit charges on select electronic payment modes, including UPI, for business transactions above a certain threshold. Once news of the bill spread, opposition leaders suggested that ordinary citizens could end up paying more to use UPI, a claim the government and the payments industry have now moved to knock down. The PCI was categorical that any such charges, if they eventually materialise, would apply only to commercial arrangements between larger merchants and payment service providers, and not to the consumer. "Merchant service charges, where applicable, are commercial arrangements between merchants and payment service providers. They do not mean that consumers pay to use digital payments," the council said. It stressed that small merchants and kirana stores would remain fully insulated from any MDR levy, keeping UPI accessible for the smallest businesses that anchor India's retail economy. Government functionaries have echoed the same position. Sitharaman, responding to criticism from Congress leader Jairam Ramesh over the possibility of higher costs for ordinary users, said the MDR question concerns merchants, not customers, and that any final call would rest with the UPI and Services Steering Committee headed by the National Payments Corporation of India, which is yet to decide. She noted clearly that Parliament had only enabled the legal framework, and that no charge has actually yet been imposed. The debate underscores the scale of what UPI has become. Launched in 2016, it has grown into the world's largest real-time payments system, processing crores of transactions every month and touching a record value of over Rs 25 lakh crore in a single month this year. Running such infrastructure, the PCI pointed out, requires continuous investment in technology, cybersecurity, fraud prevention and compliance, costs currently absorbed by banks, fintech companies and the NPCI rather than passed on to users. For now, the message from both the industry and the government is unambiguous: the UPI transaction that costs nothing today will cost nothing tomorrow, whether it is a citizen paying an auto driver or a customer settling a bill at a local kirana store. Whether the amended law eventually leads to charges on larger commercial transactions remains a matter for the steering committee to decide, but the everyday UPI user, the government insists