Government Clarifies Proposed UPI Charges Will Exclude End Users

Finance Minister Nirmala Sitharaman confirmed that any Merchant Discount Rate would apply exclusively to larger merchants.

The Bottom Line

•Proposed Unified Payments Interface charges will apply solely to eligible larger merchants above 2,000 rupees.
•Retail consumers and small shopkeepers will remain exempt from any upcoming digital transaction fees.

Clarification on Digital Payments:

The Indian government has clarified that any proposed charges on Unified Payments Interface transactions will not be borne by end users. Finance Minister Nirmala Sitharaman stated that if a Merchant Discount Rate is introduced, it would apply only to eligible merchants and not to individuals making peer-to-peer or everyday digital payments across the country.

Legislative Framework and Structure:

The proposal, which involves amending Section 10A of the Payment and Settlement Systems Act through the Taxation and Other Laws Amendment Bill, 2026, remains pending parliamentary approval. The Finance Minister emphasized that no final decision has been made, and the National Payments Corporation of India-led steering committee will take a call only after the bill is passed.

Impact on Small Businesses:

The proposed Merchant Discount Rate structure would involve a fee of 0.3 percent to 0.5 percent, applicable only on transactions above 2,000 rupees and for larger merchants. This ensures that small shopkeepers and everyday consumer transfers remain unaffected, maintaining widespread financial inclusion amidst ongoing international trade discussions regarding digital payment policies.

Pulse Intelligence

^{Context & Impact}

Context & Background

The US Trade Representative classified India's digital payment policies as a foreign trade barrier in March 2026.
Section 10A of the Payment and Settlement Systems Act is slated for amendment under the 2026 bill.

Key Consequences

Small merchants and retail consumers will continue enjoying zero-fee digital payment transfers.
Parliamentary debates on the Taxation and Other Laws Amendment Bill will determine the final fee structure.

Market & Economic Impact

Unchanged zero-fee structures for retail users protect digital transaction volume growth, supporting fintech ecosystems and digital adoption metrics.

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