UPI to Stay Free for Consumers and Small Merchants, Says Payments Council

The Story in Brief

The Payments Council of India has assured that UPI will remain free for consumers and small merchants such as kirana stores, countering speculation triggered by a parliamentary amendment. The Payment and Settlement Systems (Amendment) Bill, 2026 passed by the Lok Sabha removes the legal bar on levying Merchant Discount Rate (MDR) but does not impose any charge, the Council clarified in an X post. Finance Minister Nirmala Sitharaman said MDR, which is a fee paid by merchants to payment providers, applies only to businesses, not customers. The amendment empowers the central government to decide which payment modes may attract charges in future.

The Council explained that MDR, where applicable globally, is a commercial arrangement between merchants and payment service providers and does not translate into consumer fees. It stressed that banks, fintech firms, NPCI and RBI have invested heavily in building UPI into a world-leading real-time payment system processing billions of transactions monthly. These costs are currently borne by participants in the ecosystem. The Council argued that continued investment in security, fraud prevention and innovation is essential to sustain UPI's growth. Speculation about charging users arose after the bill passed the Lok Sabha, but the Council's statement seeks to allay public concern.