The Payments Council of India (PCI) has issued a detailed clarification amid widespread debate over the possibility of charges being imposed on Unified Payments Interface (UPI) transactions, asserting that consumers and small merchants will continue to use the digital payment platform free of cost.
In a post on X, the industry body sought to address concerns around merchant charges and explained that the ongoing discussion is centred on ensuring the long-term sustainability of India’s digital payments ecosystem rather than introducing fees for UPI users.
There has been considerable discussion around UPI and merchant charges. Here are the facts behind the conversation what it means for consumers, merchants, and India's digital payment ecosystem.
— PCI – Payments Council of India (@PCIUpdates) August 7, 2026
1. Will I have to pay to use UPI?
No. UPI has always been free for consumers since…
According to the PCI, consumers will not be charged for making UPI payments. Since the platform’s launch in 2016, UPI has remained free for users, allowing instant digital transactions without any transaction fee.
The council also clarified that small merchants and kirana stores will continue to accept UPI payments without paying any Merchant Discount Rate (MDR). It said protecting small businesses remains central to UPI’s inclusive growth model.
Explaining why the issue has resurfaced, the PCI noted that UPI has evolved into the world’s largest real-time payment system, handling billions of transactions every month. As the ecosystem expands, discussions are underway on how to sustainably support the infrastructure required to maintain the platform while ensuring consumers and small merchants remain unaffected.
The council highlighted that banks, fintech companies, payment service providers, the National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI) have collectively invested in building and maintaining UPI over the past decade. These investments span technology, cybersecurity, fraud prevention, compliance, customer support and continuous innovation to keep the platform secure and operational round the clock.
Addressing questions over the cost of operating a free payment network, the PCI said the expenses are currently borne by ecosystem participants, including banks and payment service providers, who continue investing in maintaining a safe, secure and reliable payments infrastructure.
The clarification further stated that even if merchant service charges are applicable for certain large merchants in the future, such arrangements would be commercial agreements between merchants and payment service providers. They would not result in consumers being charged for making UPI payments.
The PCI emphasised that merchant service charges are a standard feature of digital payment ecosystems globally, while consumers in many countries continue to enjoy convenient and secure digital payment services.
Describing UPI as critical national digital infrastructure used by hundreds of millions of Indians every day, the council stressed that sustained investment in security, resilience, fraud prevention and innovation will be essential to ensure the platform continues to function reliably as transaction volumes grow.
Merchant service charges are common across digital payment ecosystems worldwide and typically remain separate from consumer payment charges.
Focus on long-term sustainability
With UPI now serving hundreds of millions of Indians daily, stakeholders say ensuring its long-term sustainability is becoming increasingly important. Continued investment in infrastructure, fraud prevention, cybersecurity and innovation will be necessary to support future growth while maintaining the platform’s reliability.
The clarification seeks to reassure users that consumers and small merchants remain protected even as discussions continue on funding the infrastructure underpinning one of India’s most successful digital public platforms.
