No Transaction Charges on UPI Payments: Government Clarifies

The Government has clarified that there is no proposal to impose transaction charges on UPI payments, ensuring that digital transactions remain free for users and merchants alike.

Unified Payments Interface (UPI), managed by the National Payments Corporation of India (NPCI), had earlier permitted acquiring banks to charge a Merchant Discount Rate (MDR) of 0.30% as per NPCI’s circular dated 30 August 2019. However, Section 10A of the Payment and Settlement Systems Act, 2007, prohibits banks or system providers from levying such charges on payers or beneficiaries when using electronic payment modes notified under Section 269SU of the Income-tax Act, 1961.

To reinforce this framework, the Central Board of Direct Taxes (CBDT), through Gazette Notification No.105/2019 dated 30 December 2019, officially recognized UPI and RuPay debit cards as prescribed modes of digital payment.

In order to maintain the financial viability of the UPI ecosystem, the Government implemented an incentive scheme during the last four financial years (FY 2021–22 to FY 2024–25), extending support of approximately Rs. 8,730 crore to ecosystem partners.

Presently, the Government has reiterated that UPI services will continue without charges, strengthening India’s position as a global leader in digital payments.