UPI Payment Charges: Free UPI transactions to stay, Modi Govt not considering any charges

UPI Payment Charges Latest News Updates: UPI payment charges explained here

UPI Payment Charges: Free UPI transactions to stay, Modi Govt not considering any charges
UPI Payment Charges, Will UPI transaction be charged? The Finance Ministry has clarified. Representative image

UPI Payment Charges News Update: The Government is not considering any charges on UPI services, the Ministry of Finance today clarified. The Ministry said that the concerns of the UPI service providers for cost recovery would have to be met through other means. It also noted that UPI is a digital public good with immense convenience for the public and productivity gains for the economy.

“UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means. The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly,” the Ministry of Finance said in a series of tweets.

The clarification from the Ministry of Finance has come days after the Reserve Bank of India (RBI) sought public feedback on UPI payments and charges.

“RBI has not issued instructions regarding charges for UPI transactions. The Government has mandated a zero-charge framework for UPI transactions with effect from January 1, 2020… This means that charges in UPI are nil for users and merchants alike. Keeping in view that the intent of this discussion paper is to elicit general feedback, a few questions on what approach should be adopted, have been included,” RBI said in its ‘Discussion Paper on Charges in payment Systems’. 

Also Read: New RBI proposal: Upto Rs 25 fee on NEFT transactions initiated through bank branches

While noting that UPI as a funds transfer system is like IMPS, the discussion paper said, “Therefore, it could be argued that the charges in UPI need to be similar to charges in IMPS for fund transfer transactions. A tiered charge could be imposed based on the different amount bands.”

RBI Questions for Feedback

The discussion paper has shared the following questions for public feedback: 

  • In the context of zero charges, is subsidising costs a more effective alternative?
  • If UPI transactions are charged, should MDR for them be a percentage of transaction value or should a fixed amount irrespective of the transaction value be levied?
  • If charges are introduced, should they be administered (say, by RBI) or be market determined?

Experts say that there should be some mechanism to ensure earnings for banks and service providers engaged in providing UPI-related payment services.

“Due to initiative by the Ministry of Finance and Startup India, digital transactions in India are at an all-time high. In fact, India is the leading country in doing digital transactions in the world, mainly because UPI transactions have been made free of cost to customers. However, for the betterment of entire infrastructure-related and risk mitigation activities that have to be taken by banks and various service providers, there has to be an avenue of earning for banks and service providers,” Rohit Kumar, CEO and Founder of, an online Digital Payment Solutions platform, said while commenting on the Finance Ministry’s announcement.

“We are looking forward to hearing from the Ministry and the ecosystem as to how some amount of revenue can be generated through UPI either from the government or the customer,” Kumar added.

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