Amid reports that UPI transactions may be charged, the Payments Council of India (PCI) has clarified that the service will continue to be completely free for ordinary consumers. The Lok Sabha recently passed a new bill that allows the government to charge MDR (Merchant Discount Rate) fees from merchants for digital transactions. Following this, concerns have been raised that the common man will have to pay to use UPI.

According to the new changes, MDR of 0.25% to 0.4% is likely to be charged only on large commercial transactions above Rs 2,000. However, Finance Minister Nirmala Sitharaman has also clarified that this will only affect large merchants and will not burden small traders or the common man. That is, there will be no fee for person-to-person (P2P) payments and payments at small shops.

The government had waived fees from merchants to promote UPI transactions in the country since 2020. But with the surge in the number of digital payments, banks and fintech companies have had to spend a lot of money to provide better infrastructure and security. The government is planning to charge fees only on large commercial transactions to overcome this crisis and make digital payment systems more secure. Industry leaders like PhonePe and Pine Labs have also welcomed the move.