Free, Free, Absolutely Free: Govt Reiterates No Fee on UPI Transactions
Free, Free, Absolutely Free: Govt Reiterates No Fee on UPI Transactions
The Centre has once again clarified that Unified Payments Interface (UPI) services will remain free of charge for users, dispelling recurring speculation that transaction fees could be imposed.
Minister of State for Finance Pankaj Chaudhary, in a written reply in the Lok Sabha, confirmed that there is “no proposal to levy transaction charges on UPI-based digital payments.”
UPI, developed by the National Payments Corporation of India (NPCI), has become the backbone of India’s digital payment revolution. On August 2, the platform clocked 707 million transactions in a single day, surpassing the entire population of the United States. In July 2025, UPI reached another milestone with 1,946.79 crore transactions in one month, a global record.
While NPCI’s 2019 circular permitted acquiring banks to charge a Merchant Discount Rate (MDR) of 0.30% of the transaction value, section 10A of the Payment and Settlement Systems Act, 2007, prohibits banks or service providers from levying charges on users making or receiving payments through notified electronic modes. UPI and RuPay Debit Cards are both included under these prescribed modes.
To support the ecosystem, the government has provided incentive support of about ₹8,730 crore between FY 2021-22 and FY 2024-25. Thanks to this, UPI transactions have grown from 92 crore in FY 2017-18 to 18,587 crore in FY 2024-25, marking a 114% CAGR.
The total value of UPI transactions has also skyrocketed from ₹1.10 lakh crore in FY 2017-18 to ₹261 lakh crore in FY 2024-25. Overall digital payments in India surged from 2,071 crore transactions in FY 2017-18 to 22,831 crore in FY 2024-25.
Reiterating the government’s commitment, Chaudhary said, “No bank or system provider shall levy any charge on the payer or the beneficiary for payments made through UPI, as notified under section 269SU of the Income-tax Act, 1961.”
With India emerging as a global leader in fast digital payments, UPI continues to be hailed as a model of low-cost, high-volume fintech innovation.
