UPI may not remain free for users amid proposals to impose charges

The Story in Brief

Payments on the Unified Payments Interface (UPI) have been free so far, but the government’s Taxation and Other Laws (Amendment) Bill, 2026 would change the Payment and Settlement Systems Act so the government can notify kinds of transactions that may attract charges. The Merchant Discount Rate (MDR) is a fee merchants pay to banks and payment processors; it includes an interchange fee, processing charges, a network fee and GST. Since 2020 the government has required that UPI and RuPay debit card transactions not attract MDR; instead the government subsidised low-value UPI payments under an incentive scheme for transactions under Rs 2,000. The state paid Rs 1,389 crore in 2021-22 and Rs 3,631 crore in 2023-24, budgeting Rs 2,000 crore for 2026-27. Sources say a possible MDR could apply to large merchants with turnover above Rs 1-1.5 crore, only for transactions above Rs 2,000, and might be 0.25-0.4%.

The Indian Opinion

Some reactions stress that UPI’s defining feature – being free at point of use – is under threat, while others emphasise the government’s stated interest in digital and financial inclusion and argue most transactions would be exempt. Both positions go beyond the available facts. The Bill in Parliament would give the government discretion to notify which transactions attract charges, but no formal policy or rates have been announced. Sources’ figures on thresholds and percentage levies are reported as possibilities, not firm decisions. An ordinary reader should note this uncertainty: immediate large-scale changes are not confirmed, yet the law would permit future expansion of charges.

Original article: Will UPI remain free to use? | Explained (www.thehindu.com)

This story was summarised and commented on by AI from the source linked above.