UPI Payments Remain Free for Individuals, Govt Clarifies

The Cliff News | 16 September 2026

The Indian government has released a new framework for Unified Payments Interface (UPI) transactions, sparking questions about potential charges for everyday users. However, authorities have definitively stated that Person-to-Person (P2P) UPI payments will remain entirely free of charge for the general public.

This clarification aims to alleviate concerns that have been circulating among UPI users across the country. The vast majority of small businesses will also remain unaffected by any new fee structures.

Understanding the New UPI Framework

The primary concern driving user anxiety was whether individuals would now have to pay fees for using UPI. The government's announcement directly addresses this, ensuring that sending money from one individual to another via UPI will not incur any charges, regardless of the transaction amount.

No Charges for Person-to-Person UPI Transactions

Crucially, the government has explicitly stated that Person-to-Person (P2P) UPI payments will continue to be completely free. This means that individuals transferring funds to friends, family, or other individuals will not face any additional costs for these transactions. This segment constitutes a significant portion of UPI usage in India.

Government sources indicate that approximately 70 percent of the total UPI transaction value comprises these P2P payments. The new framework aims to maintain the accessibility and widespread adoption of UPI for personal financial transfers.

Merchant Discount Rate (MDR) for Larger Businesses

While P2P transactions are exempt, the new framework will introduce charges for certain larger merchants. Merchant Discount Rate (MDR) will be applicable on transactions made by some larger businesses. This measure is expected to impact a smaller segment of the UPI ecosystem and is part of a broader effort to ensure the sustainability and development of the digital payments infrastructure.

The government's move seeks to balance the promotion of digital payments with the financial viability of the systems supporting these transactions. Further details regarding the specific thresholds for large merchants and the exact MDR rates are expected to be released in due course.