PhonePe, Razorpay chiefs say UPI will stay free for users, back sustainable model

PhonePe cofounder and chief executive Sameer Nigam and Razorpay cofounder and chief executive Harshil Mathur have said Unified Payments Interface (UPI) payments will remain free for consumers while backing a sustainable revenue model, adding to industry support for merchant charges on larger businesses.

“Consumers will not be charged anything for making UPI payments,” Nigam said on X on Saturday.

Mathur said consumers and small merchants should remain protected, but UPI needs sustainable economics. “Every great digital infrastructure needs a sustainable model behind it, one that enables continuous investment in reliability, security and innovation,” he said. Without one, Mathur added, the system would deteriorate.


The Payments Council of India (PCI) on Friday backed charges for larger businesses, saying the revenue would help banks and payment companies fund technology, cybersecurity and fraud prevention. It said small businesses, including kirana stores, should remain exempt and any merchant service charge would be a commercial arrangement between merchants and payment providers rather than a customer charge.

The statements follow the Lok Sabha’s passage of the Taxation and Other Laws (Amendment) Bill, 2026, which removes the legal bar on banks and payment companies charging merchant discount rate (MDR) on notified digital modes.

The amendment does not impose MDR. It allows the Centre to specify where charges may be permitted. No rate or threshold has been finalised.

Finance minister Nirmala Sitharaman rejected Congress leader Jairam Ramesh’s claim that the Bill would end free UPI payments for users, saying any future MDR would be borne by businesses, not customers. She said the NPCI-led UPI and Services Steering Committee would consider MDR only after Parliament clears the Bill.

MDR is paid by merchants to banks and payment companies for processing digital payments. It has been zero on UPI transactions since January 2020, leaving the ecosystem dependent on government incentives and other financial products for revenue.

ET first reported on July 16 that the Centre was considering MDR for large merchants, potentially at 5-7 basis points for businesses with turnover of Rs 1-1.5 crore or more. Peer-to-peer payments and small merchants are expected to remain exempt.

A parliamentary standing committee in March recommended a graded MDR for larger merchants alongside three years of incentives and cashbacks for low-value payments in tier-3 to tier-6 cities.

UPI processed 23.6 billion transactions worth Rs 29.9 lakh crore in July, according to NPCI. PhonePe and Google Pay together controlled nearly 80% of volumes.