UPI Costs Rs 20,700 Crore, Government Allocation Just Rs 2,000 Crore: Parliament Panel
The proposal would let banks charge a 0.3% to 0.5% fee on some UPI payments above Rs 2,000, ending the zero-fee rule.
- New Delhi is reportedly considering amendments to allow a Merchant Discount Rate on certain Unified Payments Interface transactions, granting the government authority to introduce fees when deemed necessary.
- Payment companies argue that maintaining a zero-fee system is not sustainable, noting that small fees on high-value transactions could help the industry improve digital infrastructure and security.
- The government is considering an MDR between 0.3 per cent and 0.5 per cent for Unified Payments Interface payments over Rs 2,000, which account for about 65 per cent of total transaction value.
- Merchants with annual sales above Rs 1.5 crore would likely face these potential fees, though discussions continue about capping charges or tying costs to business size.
- Unified Payments Interface is not suddenly becoming expensive for most people, as the government is merely exploring options with nothing changing overnight for the average user.
14 Articles
14 Articles
UPI costs Rs 20,700 crore, government allocation just Rs 2,000 crore: Parliament Panel
A parliamentary committee suggests a self-reliant revenue model for UPI's financial sustainability. Amendments to the Payment and Settlement Systems Act now permit transaction charges on digital payments. The committee noted a significant funding gap between allocations and operational costs. Future merchant discount rate charges will be nominal and apply to limited high-value transactions.
Govt mulls MDR charge or “tiered incentives” to make UPI financially self-sustaining
The Parliamentary Standing Committee on Finance remain deeply concerned by the staggering mismatch between the Rs 2,000 crore allocation and the industry’s estimated operational cost of Rs 20,700 crore.
India UPI Fee Update: A New Business Model for Payments
Legislative Milestone: On August 6, 2026, the Indian government introduced a framework to potentially end the mandatory zero-fee regime for UPI transactions. Transaction Scale: The Unified Payments Interface (UPI) processed a record 23.6 billion transactions in July 2026, intensifying pressure to fund digital infrastructure. India is taking significant steps to rethink how its digital payments ecosystem is funded. For years, the country has reli…
A leading Indian economist says that it is incorrect to say that the MDR charge on UPI will not affect customers. Customers may be affected indirectly.
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