Is UPI ending free payments for all users? Here’s what Finance Ministry says

There has been growing confusion over whether Unified Payments Interface (UPI) payments will soon become chargeable for all users. However, the latest clarification by the Finance Ministry makes it clear that standard bank-to-bank UPI transfers between individuals will continue to be free.

Will sending money to friends or family members through the UPI become chargeable?

In a release dated August 8, 2026, the Finance Ministry said that standard bank-to-bank UPI transfers remain completely free for everyday personal use, with zero transaction charges added to your payments.

Will every merchant accepting the UPI have to pay charges?

Most everyday payments to businesses stay completely free, says the Ministry.
Any future fee will only affect certain high-value business payments, the Ministry clarifies, adding that the charges will be small, and it will still cost much less than using a debit or a credit card.


The changes are aimed at making the UPI ecosystem more future-ready. The focus is on strengthening cybersecurity, improving network stability, preventing fraud and supporting further innovation in the digital payments system, as per the release.

Why did the government amend the Payment and Settlement Systems Act?

The release states: “The recent amendment to the Payment and Settlement Systems Act (PSS Act) has generated debate, with some misinterpreting it as a move to impose charges on ordinary users. In reality, the amendment is an enabling provision designed to ensure the UPI’s long-term sustainability, technological advancement, and resilience against emerging risks.”

Nominal MDR for merchants

As and when MDR charges are introduced, they will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs, the Finance Ministry clarified.

What is MDR?

MDR refers to the fee charged to a merchant by a bank for accepting payments from customers via digital modes like credit cards, debit cards, UPI, etc.

What is the UPI?

The National Payments Corporation of India (NPCI) developed the Unified Payments Interface (UPI), a real-time, immediate payment system in India. It enables users to link several bank accounts to a single mobile app and immediately transfer money using a UPI ID, mobile number, or a QR code without adding a beneficiary.


“Today, the UPI has grown into the world’s largest real-time payment system, processing 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 alone. The UPI is now live in 11 foreign countries, and many other countries have shown interest, says the Finance Ministry in its release.