Amid ongoing discussions about imposing a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions , the Payments Council of India (PCI) has clarified that UPI will remain completely free for consumers. Furthermore, small businesses will not be charged any fees for accepting UPI payments.
There is no proposal to charge consumers.
In a statement released on the social media platform X, the industry body said that UPI has been free for consumers since its launch in 2016. PCI clarified that there is no proposal to levy any transaction fee on individuals. “UPI has always been free for consumers since its launch in 2016. Every citizen of the country will continue to be able to make instant digital payments without any additional charges,” PCI said.
UPI has become the backbone of digital payments
The organization stated that UPI was designed to make digital payments accessible to all sections of society. Today, it forms the backbone of India’s digital payments ecosystem, with a large number of people using it for everyday transactions.
The debate is not about charging fees but about the stability of UPI.
PCI’s clarification comes at a time when discussions are raging about the long-term sustainability of India’s rapidly expanding digital payments infrastructure. The organization said the current debate is not about charging consumers fees, but about maintaining and growing a digital ecosystem that handles billions of transactions every month.
MDR is not applicable on small businesses.
The organization emphasized that small merchants are not subject to any MDR and do not incur any fees for accepting UPI payments. Empowering small merchants and connecting them to the digital economy is a key part of the core vision of UPI. According to PCI, small merchants do not have to pay any MDR for accepting UPI payments. UPI was designed to enable even the smallest businesses in the country to adopt digital payments without additional costs.
Small shopkeepers and micro-businesses benefit
UPI has provided millions of small shopkeepers, street vendors, grocery stores, and micro-enterprises across the country with an easy and cost-effective way to accept digital payments. This has reduced cash dependence and promoted financial inclusion.
Increased emphasis on technological advancement and cyber security
The Payments Council of India said that UPI has now grown from a simple payment platform to the world’s largest real-time payment system, necessitating continuous enhancements in technology upgradation, cybersecurity, fraud prevention and operational efficiency.
Discussion on making digital infrastructure sustainable
According to the organization, as the number of UPI transactions increases, discussions are underway to find ways to maintain the sustainability of this massive digital infrastructure, while ensuring that ordinary consumers and small businesses are not burdened financially.
Banks and fintech companies made huge investments
PCI said that over the last decade or so, banks, fintech companies, payment service providers, National Payments Corporation of India (NPCI) and Reserve Bank of India (RBI) have together made huge investments in building and operating the UPI network.