The government recently decided to end over six years of zero-fee Unified Payments Interface (UPI) usage by introducing a 0.4% surcharge on merchant transactions greater than ₹2,000. The decision generated immediate friction among local business owners.
The network powers payments for more than 500 million consumers purchasing everyday items—from street tea to smartphones—across Asia’s third-largest market.
Clarifications issued
As public confusion mounted regarding potential fees on general consumer shopping and peer-to-peer transfers, the government issued key clarifications.
Will ordinary consumers be charged for making payments via UPI?
Answer: No, services will continue without any cost to consumers. Consumers can continue to transact free-of-cost using UPI as they have been doing till now.
Consumers making payments through UPI will not face any charges. Individual account holders can continue using UPI applications for all routine, daily expenses without worrying about any charges. The MDR policy ensures that UPI remain free and accessible for all citizens across India.
Is there any charge for UPI’s Person-to-Person (P2P) transactions like sending money to friends, family, or personal contacts?
Answer: No, P2P transactions will continue to be free-of-cost for both payer as well as beneficiary. There will be no charges for any person transferring or receiving any amount to or from any other person (or even self-transfers) using UPI.
Whether you are transferring money to a family member, splitting a bill with friends, or performing self-transfers across your own linked bank accounts, zero charges apply. Citizens can freely make transfers on UPI of any permitted amount without incurring any transaction fees.
UPI fee rollout may be delayed for larger payments
Now, officials are weighing a multi-month delay for the rollout on larger transactions, according to regulatory and industry sources cited by Reuters. While the National Payments Corporation of India has yet to issue its formal ruling, a verdict is anticipated shortly.
Postponing the levy would provide financial technology companies with essential time to update back-end systems without transferring costs to consumers, while mitigating operational disruptions for merchants throughout the busy holiday season.
In August, top payment platforms Walmart-backed PhonePe and Alphabet’s Google Pay commanded roughly 80% of total UPI transaction volume.
The original launch date of October 15 for UPI fee directly overlapped with the nation’s peak holiday shopping period running through December, which traditionally drives a massive rise in retail spending.