Tag: UPI

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UPI MDR set to reshape digital payments

India’s digital payments ecosystem is preparing for a significant change as a new Merchant Discount Rate (MDR) is set to apply to certain high-value UPI payments from October 15. The move is aimed at creating a more sustainable revenue model for the payments industry, but it has also raised questions among merchants, traders and consumers.

Under the new framework, a 0.4% MDR will apply to person-to-merchant (P2M) UPI transactions above ₹2,000. The charge will be paid by merchants and will be capped at ₹300 for transactions of ₹75,000 and above. Person-to-person UPI transfers will continue to remain free, irrespective of the amount.

The government has also sought to clarify that the MDR is not a tax, cess or surcharge. The money collected will not go to the government but will be distributed among participants in the UPI ecosystem, including banks, payment gateways and UPI applications.

The change comes after years of zero-MDR transactions on UPI. Since January 2020, UPI transactions have carried no MDR as the government sought to accelerate digital payments and encourage merchants and consumers to move away from cash. The new framework is intended to provide another source of revenue for an ecosystem whose infrastructure and transaction-settlement costs continue to grow.

Most UPI payments remain outside the charge

The headline figure of a 0.4% fee may sound significant, but the impact will be limited to a relatively small portion of transactions.

Government data shows that only around 4% of P2M UPI transactions are above ₹2,000 and will attract the new MDR. However, these transactions account for about two-thirds of P2M payments by value, making them important for the overall economics of the UPI network.

The government has said about 96% of merchant transactions will remain unaffected. Payments of up to ₹2,000 will continue to carry zero MDR, while small merchants covered under the existing zero-MDR framework will also remain protected.

NPCI Managing Director Dilip Asbe has said around 75% of India’s more than 60 million digital-payment merchants have never recorded a UPI transaction above ₹2,000. This means a large majority of merchants are unlikely to see a direct impact from the new fee.

Certain essential categories, including railways, telecom, insurance, fuel and agricultural inputs, will also have a concessional MDR of ₹5 on eligible transactions above ₹2,000.

Will consumers pay more?

One of the biggest concerns surrounding the new UPI MDR is whether merchants will eventually pass the cost on to customers through higher prices.

Government sources have said the proposed fee will not be passed on to consumers. Authorities are also considering discussions with the Indian Banks’ Association and trader organisations to address concerns over merchants adding the charge to bills.

That distinction is important. The MDR is a fee for payment processing and settlement, rather than a charge imposed directly on the person making the UPI payment.

The government has also rejected concerns that the fee could push consumers back towards cash. Officials have argued that merchants already absorb MDR on other payment methods, particularly credit cards, where merchant fees are generally much higher than the proposed UPI rate.

Still, the response from businesses will be closely watched once the new system becomes operational. UPI has become deeply embedded in everyday commerce, from small shops and restaurants to large retailers and service providers. Any change in the cost of accepting digital payments could influence how businesses manage their payment mix.

GST adds another layer

The treatment of GST on the new merchant fee has emerged as another important issue.

Since MDR is considered a payment-processing service, an 18% GST applies to the merchant fee. This means the GST would be charged on the MDR amount rather than on the underlying UPI transaction value.

The GST Council is expected to take a view on the issue. Its next meeting is scheduled for October 7, ahead of the October 15 implementation of the MDR. Government sources have expressed hope that the Council will review the 18% GST on UPI merchant fees.

For GST-registered businesses, the additional tax may be partly offset through Input Tax Credit (ITC), provided they meet the eligibility conditions. Businesses dealing with exempt supplies may not receive the same benefit and could therefore face a higher effective cost.

A new revenue model for UPI

The broader objective is to make India’s digital payments infrastructure financially more sustainable.

Government estimates suggest the annual cost of running and settling UPI transactions is around ₹20,000 crore. While the new MDR could generate substantial revenue, officials have indicated that collections may still fall short of the full cost of maintaining the system.

The fee will be shared among different participants in the payments ecosystem rather than flowing into government coffers. The proposed structure is therefore less about creating a new consumer charge and more about introducing a revenue stream for banks, payment service providers and other entities that support UPI transactions.

The bigger test will begin on October 15, when India’s largest digital payments network moves from an almost entirely zero-MDR model towards a system in which high-value merchant transactions help fund the infrastructure behind the country’s digital payments growth.

 

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NPCI clears confusion over new UPI charges

The National Payments Corporation of India (NPCI) has clarified that the upcoming 18% Goods and Services Tax (GST) on the Merchant Discount Rate (MDR) will not make most UPI payments more expensive for small merchants.

The clarification came after reports raised concerns that GST on UPI transactions above ₹2,000 could increase the cost of digital payments for small shopkeepers, vendors and other businesses.

NPCI said the 18% GST will not be charged on the full value of a UPI payment. It will apply only to the MDR, which is a payment-processing fee charged on certain merchant transactions. The new MDR framework will take effect from October 15.

Under the revised rules, a 0.4% MDR will apply to specified person-to-merchant (P2M) UPI transactions above ₹2,000. The fee will be capped at ₹300 for transactions of ₹75,000 and above. The merchant, rather than the customer, bears the MDR.

The key point for everyday UPI users is that payments of up to ₹2,000 will continue to have zero MDR. NPCI said more than 96% of UPI merchant transactions fall within this limit, meaning the vast majority of transactions will remain outside the new MDR framework.

Person-to-person UPI transfers will also remain completely free, regardless of the amount being transferred. Payments to eligible small merchants covered under the zero-MDR framework will continue without the fee as well.

The GST calculation is another important distinction.

If a customer makes a ₹10,000 UPI payment to a merchant, the 0.4% MDR would amount to ₹40. The 18% GST would then be calculated on the ₹40 MDR, which comes to ₹7.20. The GST is therefore not 18% of the ₹10,000 transaction.

In effect, the merchant’s total payment-processing cost would be ₹47.20 in this example, subject to the applicable rules. The customer should not be charged an additional UPI fee simply because the payment is above ₹2,000.

GST-registered businesses can also claim input tax credit on the GST paid on MDR, subject to the normal GST rules. This allows eligible businesses to adjust the tax paid on the payment-processing service against their output tax liability.

NPCI said merchants receiving up to ₹1 lakh a month through UPI will not be liable to pay MDR. This exemption is intended to protect smaller businesses and keep low-value digital payments affordable.

There is, however, a narrower group of merchants that has prompted questions. Some businesses may have annual turnover below the GST registration threshold but receive more than ₹1 lakh a month through UPI. Such merchants may not qualify for the small-merchant MDR exemption and may also be unable to claim input tax credit if they are not registered under GST.

The issue has attracted attention because UPI has become a major part of India’s retail payment system. From roadside vendors and neighbourhood shops to restaurants and large retailers, businesses increasingly depend on QR-code payments.

The new MDR framework marks a shift from the long-standing zero-MDR model for UPI. The government and NPCI have said the change is intended to create a revenue stream for the digital payments ecosystem while protecting small-value transactions.

MDR is not a government tax. It is a fee distributed among participants in the payments ecosystem, including banks and payment service providers, to support the operation and expansion of UPI.

The government has also maintained that the new structure will not affect ordinary consumers using UPI. The change is focused on selected merchant payments rather than person-to-person transfers.

Some industry groups and businesses, however, have raised concerns about the additional cost for merchants handling larger UPI transactions. Retailers and payment-intensive businesses have questioned whether even a small fee could affect businesses operating on thin margins.

The distinction between the transaction value and the MDR is therefore central to the latest debate. A ₹5,000 or ₹10,000 UPI payment does not attract an 18% GST on its entire value. The tax applies only to the MDR charged on an eligible merchant transaction.

The new rules will also introduce different MDR rates for certain categories. Specified sectors such as railways, telecom services, insurance and fuel will have a concessional flat MDR of ₹5 on eligible transactions above ₹2,000.

For consumers, the immediate takeaway is simple: UPI remains free for person-to-person transfers, payments up to ₹2,000 and eligible small merchants. The new charge mainly affects specified higher-value merchant transactions from October 15.

NPCI’s latest clarification is aimed at clearing confusion before the new UPI MDR system takes effect. While the framework introduces a new cost for some merchants, the regulator says the impact will remain limited for most small businesses and everyday digital payments.

 

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Bank strike may disrupt services for five days

Bank customers may need to finish important branch-related work early next week as bank employee unions have called a three-day nationwide strike from September 28 to 30.

The strike comes immediately after the September 26-27 weekend, raising the possibility of disruption to regular branch services for five consecutive days. However, this does not necessarily mean that every bank branch will remain closed throughout the five-day period. Digital banking, ATMs and other essential services are expected to remain available.

The United Forum of Bank Unions (UFBU), an umbrella body representing seven bank employee and officer unions, has called the strike. The unions have been pressing for the introduction of a five-day banking week, along with several other demands related to employees and pensioners.

The five-day workweek remains the main issue behind the latest strike call. The demand has been pending since the 2024 wage settlement, and unions have been seeking its early implementation. They have also raised concerns over performance-linked incentives and other service-related matters.

Other demands include pension updation, a uniform dearness allowance formula for pensioners and an option for employees covered under the National Pension System (NPS) to move to the Old Pension Scheme. The unions have also raised several pending wage and service-related issues.

The latest strike follows a nationwide one-day bank strike on September 11, which affected over-the-counter banking services, cash transactions and cheque clearances in several parts of the country. The impact was uneven, with some cities seeing relatively normal operations while disruptions were reported in states and smaller cities.

With another strike approaching, the government has started preparing for possible disruption. The Department of Financial Services under the Finance Ministry is scheduled to meet the chiefs of public sector banks, regional rural banks, the Indian Banks’ Association and NABARD to review contingency arrangements.

The meeting is expected to focus on maintaining essential banking services and reducing inconvenience to customers during the strike. The timing is particularly important because the strike coincides with the end of the half-year, a period when banks handle additional accounting and reporting work.

Major banks have already begun alerting customers.

State Bank of India (SBI) has advised customers to complete important branch-related transactions before the strike dates. The bank has also said it is making arrangements to keep essential services running during the disruption.

Union Bank of India has similarly issued an advisory asking customers to plan important banking work in advance. Customers are encouraged to use digital channels wherever possible during the strike period.

Customers should therefore consider completing work that requires a physical branch visit before September 28. This could include certain cash transactions, cheque-related work, document submission and other services that cannot be completed digitally.

The situation is different for online banking users. Internet banking, mobile banking, UPI and ATMs are expected to continue operating, although customers could still experience delays in some services depending on the bank and the nature of the transaction.

The five-day period does not mean that the entire banking system will stop functioning. Branch operations are the area most likely to face disruption because of the strike. Customers can continue to use digital payment systems and other automated channels for routine transactions.

The unions had issued their strike notice earlier and held discussions with the government and the Indian Banks’ Association. Conciliation efforts have taken place, but the issue of a five-day banking week has remained unresolved. The UFBU has indicated that it will continue with the strike unless there is concrete progress on its demands.

The banking unions represent a large section of bank employees and officers, meaning the strike could have a noticeable impact on public sector bank operations. The effect, however, may differ from one location to another depending on participation and the availability of alternative banking channels.

The current strike programme also extends beyond September. The unions have announced further industrial action, including a continuous strike from October 26, as part of their broader campaign over their demands.

The immediate priority is to avoid leaving urgent branch work until the last moment. Routine payments and money transfers can largely be handled through UPI, mobile banking, internet banking and ATMs, but services requiring staff assistance may face delays.

The September 28-30 strike is therefore expected to create the most visible disruption at bank branches, while digital banking services should continue to provide an alternative for everyday transactions. Government officials, banks and unions will continue discussions as the strike approaches, leaving open the possibility of developments before the scheduled action.

 

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Technology

Apple Pay may launch in India soon

Apple Pay could arrive in India as early as October 2026, according to reports, giving iPhone and Apple Watch users access to Apple’s digital payment service.

The initial offering is expected to focus on credit card payments, with Axis Bank likely to be among the first banking partners. Apple is also reported to be in discussions with HDFC Bank and ICICI Bank, though their participation has not been finalised.

Apple Pay allows users to add eligible cards to the Apple Wallet and make payments at contactless terminals using an iPhone or Apple Watch. Transactions can be authorised through Face ID or Touch ID, without requiring users to carry a physical card.

The service uses tokenisation for security. A device-specific number is used during transactions instead of sharing the user’s actual card number with merchants.

Cards issued on major networks such as Visa and Mastercard are expected to be supported. More banks could join the service later.

The biggest question for Indian users is UPI support. Some reports have indicated that Apple is exploring UPI integration, while others suggest the service could initially be limited to card payments. Apple has not publicly confirmed whether UPI will be available.

That distinction matters because UPI dominates India’s digital payments ecosystem. Consumers routinely use services such as Google Pay, PhonePe and Paytm to make QR-code payments, transfer money and pay bills.

A card-only service would give Apple users a convenient option for contactless payments, but it would not replace the UPI-based transactions that are part of everyday payments across India.

UPI integration would require Apple to work with the National Payments Corporation of India (NPCI) and a partner bank. Discussions around bringing the service to India have reportedly included these arrangements, but no final details have been announced.

Apple Pay was introduced in the US in 2014 but has remained unavailable in India despite the country’s rapid shift towards digital payments.

Apple’s growing presence in the Indian smartphone market has increased the potential customer base for its payment service. The company has expanded its business in India through iPhone sales, local manufacturing and its own retail stores.

The company has reportedly been negotiating with Indian banks and payment networks over the service. Commercial terms, including how transaction revenue would be shared, have been part of the discussions.

The possible entry comes as India’s digital payments sector continues to evolve. UPI has expanded rapidly, while banks, technology companies and payment platforms compete for users and transactions.

Apple Pay could offer a different experience for iPhone users by allowing them to pay directly through their devices at compatible card terminals. The service would also bring Apple’s existing payment security features to Indian consumers.

The number of participating banks will be important at the start. Users whose cards are not supported may have to wait until their banks join the platform.

Apple has not officially confirmed the reported October date, participating banks or the complete set of features planned for India.

The key questions ahead of any rollout are therefore straightforward: which banks will support Apple Pay, which cards will work, and whether UPI will be available from the beginning. Those details will determine how widely the service can be used by Indian consumers.

 

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UPI payments up to ₹2,000 remain free under new rules

The government has formally notified that UPI transactions of up to ₹2,000 and payments made through RuPay debit cards cannot attract any direct or indirect charges. The move provides clarity to millions of users and merchants who rely on digital payments for everyday transactions.

The notification was issued by the Ministry of Finance on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007. It specifically identifies RuPay debit cards and UPI transactions up to ₹2,000 as electronic payment modes on which banks and system providers cannot impose charges.

The government has also made it clear that the protection covers both sides of a transaction. Banks and payment system providers cannot directly or indirectly charge either the person making the payment or the person receiving it when the transaction falls within the specified limit.

The decision is important because UPI has become the most widely used digital payment method in India. Consumers routinely use UPI to pay for groceries, food, transport, utility bills and other everyday purchases. Small businesses, street vendors and merchants have also increasingly moved away from cash as UPI payments have become easier and faster.

The new notification, however, has also opened the door to a possible change in the way higher-value UPI transactions are handled. While payments up to ₹2,000 are protected from charges, the government has not said that transactions above this threshold will definitely attract a fee.

This distinction has become the centre of attention for the digital payments industry. The government is considering changes to the Merchant Discount Rate (MDR) framework, which is the fee associated with processing certain digital payments. A decision on whether and how MDR could apply to higher-value UPI merchant transactions is still awaited.

The development therefore does not mean that users will suddenly start paying a fee every time they make a UPI payment above ₹2,000. The notification establishes a protected threshold, but it does not itself announce a new charge on transactions above that level. The government has yet to finalise how such charges, if introduced, would work.

This distinction is important for consumers because much of the discussion around UPI charges has created confusion in recent days. The latest rules ensure that small-value digital payments remain free, while leaving room for a possible new pricing structure for larger merchant transactions.

The issue is closely linked to the cost of maintaining India’s rapidly expanding digital payments infrastructure. Banks, payment service providers, UPI apps and other participants incur expenses while processing transactions and maintaining the technology required to keep the system running around the clock.

At present, the government supports the digital payments ecosystem through incentive schemes. Earlier programmes have provided financial support to banks and other participants to encourage low-value UPI transactions and RuPay debit card usage.

The government has previously used incentives to promote BHIM-UPI and RuPay debit cards, particularly among small merchants. Under an earlier incentive scheme, transactions of up to ₹2,000 involving eligible small merchants received support designed to encourage merchants to accept digital payments without imposing an additional cost on customers.

The scale of UPI makes the question of payment costs increasingly important. In 2025-26, UPI processed more than 24,000 crore transactions, with the total value crossing ₹314 lakh crore, according to figures cited in recent reports. The numbers underline how deeply UPI has become embedded in India’s financial system.

The government’s latest move is also aimed at protecting the accessibility of digital payments. Keeping low-value transactions free is expected to benefit consumers who use UPI for frequent, relatively small payments. It should also help small merchants continue accepting digital payments without worrying about additional costs on everyday purchases.

RuPay debit card payments have received similar protection under the notification. RuPay is India’s domestic card payment network and has been promoted as an alternative to international card networks. The continued exemption is expected to support its use among consumers and merchants.

The larger question now is what happens to UPI payments above ₹2,000. A possible MDR structure could change the economics of merchant payments, particularly for businesses handling larger transactions. The government will have to balance the sustainability of the payment ecosystem with the need to keep digital payments affordable.

The notification also comes at a time when India is pushing deeper into a less-cash economy. UPI has played a major role in bringing digital payments to smaller towns, local shops and individual businesses. Any changes to its pricing structure could therefore have a wider impact on consumers and merchants.

UPI payments up to ₹2,000 remain free, and RuPay debit card payments are also protected from charges. The focus will now shift to the government’s next decision on merchant fees and MDR for larger-value digital transactions.

 

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Technology

PM Modi backs global UPI expansion

Prime Minister Narendra Modi has urged India’s fintech industry to take UPI beyond India’s borders and build stronger links with payment systems in other countries, as the sector looks towards its next phase of growth.

Speaking at the Global Fintech Fest 2026 in Mumbai, PM Modi said India’s fintech journey had reached a stage where the country could play a larger role in shaping global digital payments. He called for UPI to be connected with more international payment systems, particularly in countries with large Indian communities, strong trade ties with India or an interest in digital cooperation.

The push comes as UPI has grown into one of the world’s largest digital payment platforms by transaction volume. It is currently available in 11 countries, including Singapore, the UAE, France and Nepal. In August, UPI processed 24.51 billion transactions worth around $314 billion, highlighting the scale of India’s domestic digital payments market.

The international expansion of UPI could open a much larger market. Linking payment systems could make cross-border transactions faster and cheaper, while also helping Indian companies, travellers and overseas Indians make payments without relying entirely on traditional international payment networks.

He pointed to the UPI-PayNow connection with Singapore as an example of what such partnerships can achieve. The two systems allow users to transfer money between India and Singapore using mobile numbers or payment identifiers, making remittances more convenient.

The Prime Minister said similar arrangements could be explored with more countries. For India, lower remittance costs could be particularly significant as the country remains one of the world’s largest recipients of money sent home by overseas workers.

PM Modi’s message to the fintech industry was not limited to payments. He said the next phase of India’s fintech growth should move into areas such as credit, insurance, savings, investments and pensions.

That shift could create new opportunities for fintech companies that have traditionally focused on payments. Digital lending, wealth management, insurance technology and financial services for small businesses are increasingly becoming important parts of the ecosystem.

The government is also looking at emerging technologies that could reshape financial services. He highlighted agentic artificial intelligence, tokenisation and quantum technology, urging the industry to turn their potential into practical applications.

AI could help automate financial decisions, detect fraud and improve customer service for many businesses. Tokenisation could create new ways of handling financial and digital assets, while quantum technology could eventually have implications for security and financial computing.

At the same time, faster digital adoption brings new risks. PM Modi called for stronger cybersecurity and ethical data protection standards, along with better consumer protection. The government wants innovation to continue, but with safeguards that can maintain confidence in digital financial services.

The Reserve Bank of India is also focusing on this balance between innovation and regulation. RBI Governor Sanjay Malhotra said fintech has expanded access to financial services across India, helping bring banking closer to rural communities, small businesses and consumers who were previously underserved.

He highlighted the role of digital public infrastructure such as UPI, Aadhaar-enabled payments and Jan Dhan accounts in widening financial inclusion. Fintech is also increasingly being used to improve access to credit for micro, small and medium enterprises through data-based lending systems.

This creates a potentially larger business opportunity. The domestic market provides scale, while international payment partnerships could offer a route into new markets.

The Global Fintech Fest, being held in Mumbai from September 8 to 11, brings together financial institutions, technology companies, investors, regulators and startups from across the world. This year’s focus is on building trusted and connected financial systems using technologies including agentic AI, tokenisation and quantum computing.

India’s growing fintech ecosystem is also benefiting from increased investor and entrepreneurial interest. Modi said the country’s young entrepreneurs are showing a greater willingness to take risks and experiment with new business models.

That appetite could become important as the industry moves beyond the success of digital payments. UPI has already demonstrated that India can build and operate a digital financial platform at massive scale. The challenge now is to turn that success into a broader fintech ecosystem with global reach.

The internationalisation of UPI could also strengthen India’s position in the global digital economy. Instead of simply adopting payment standards created elsewhere, India is increasingly seeking to develop its own systems and connect them with international networks.

This opportunity for fintech companies is therefore moving from transaction volumes to a wider financial-services market. Payments remain the foundation, but credit, insurance, investments, cybersecurity, data services and emerging technologies could drive the next wave of growth.

PM Modi’s message at the Mumbai event was ultimately about scale, taking an Indian fintech success story to global markets while building the technology and safeguards needed for its next stage.

With UPI already handling billions of transactions every month, the focus is now shifting from how quickly India’s digital payment system can grow at home to how effectively it can connect businesses, consumers and financial institutions across borders.

 

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UPI turns 10, emerges as global payments leader

The Unified Payments Interface (UPI) has completed 10 years, marking a remarkable transformation in how Indians send, receive and spend money. What began as a digital payments experiment has grown into the backbone of India’s cashless economy, with UPI now handling nearly half of the world’s real-time payment transactions.

Prime Minister Narendra Modi marked the milestone on August 25, recalling UPI’s decade-long journey and describing it as a major turning point in India’s digital payments revolution. He also invited citizens to share how UPI has changed their everyday lives.

The numbers show just how dramatically the platform has grown. UPI processed only 1.78 crore transactions during 2016-17. By 2025-26, annual transaction volume had crossed 24,162 crore, representing an almost 13,000-fold increase. The value of transactions also climbed from ₹0.07 lakh crore in 2016-17 to around ₹314 lakh crore in 2025-26.

UPI was launched on August 25, 2016, by the National Payments Corporation of India (NPCI), under the regulatory oversight of the Reserve Bank of India (RBI). It initially had only a small number of participating banks and limited public awareness.

Over the years, however, smartphones, affordable internet access, QR codes and a rapidly expanding digital ecosystem helped UPI move into everyday life. Today, people use it for everything from buying groceries and paying utility bills to transferring money to family members and splitting restaurant bills.

The simplicity of the system has been one of its biggest strengths. Users can make instant bank-to-bank payments without needing to remember lengthy account details. This has helped make digital payments accessible not only to urban consumers but also to small merchants, street vendors and businesses across the country.

The government says UPI accounted for about 84% of India’s digital payments in 2025-26. The platform was processing an average of around 66 crore transactions a day in 2026, underlining how deeply digital payments have become embedded in daily economic activity.

The growth has continued even after reaching massive scale. Monthly UPI transactions crossed 2,300 crore for the first time in May 2026, when the system processed about 2,320 crore transactions.

The momentum continued in July, when UPI recorded a new monthly high of 2,366 crore transactions. The transaction value also touched a record ₹29.88 lakh crore during the month.

The banking network supporting UPI has expanded alongside usage. From 21 banks at the beginning, the number of banks live on the platform had reached 741 by July 2026. This expansion has helped make UPI increasingly interoperable and available across India‘s diverse banking ecosystem.

UPI’s influence is no longer restricted to India. According to government data, the platform accounted for nearly 49% of global real-time payment transaction volume in 2025, a figure recognised by the International Monetary Fund (IMF).

The system is also being used for cross-border digital payments. UPI is currently operational in 11 countries, including the United Arab Emirates, France, Bhutan, Sri Lanka, Nepal, Singapore, Mauritius, Qatar, Cambodia, Greece and the Maldives. This international expansion gives Indian travellers more opportunities to use familiar payment methods abroad while also increasing the global visibility of India’s digital public infrastructure.

UPI’s impact extends beyond the convenience of tapping a phone or scanning a QR code. Its rapid adoption has supported financial inclusion by making electronic payments available to people and businesses that may previously have depended heavily on cash.

For small merchants, digital payments can reduce the need to handle cash and make transactions quicker. For consumers, they offer convenience and a digital record of payments. For banks and fintech companies, UPI has created an open and interoperable platform around which a wider digital financial services ecosystem has developed.

The scale of adoption has also changed consumer expectations. Instant payments are now increasingly viewed as a normal part of everyday life rather than a specialised banking service.

The next phase of UPI is likely to focus on deeper adoption, international connectivity, financial inclusion and new digital financial services. With transaction volumes already running into billions every month, maintaining reliability, security and resilience will be just as important as increasing adoption.

UPI’s first decade has demonstrated that digital public infrastructure can operate at enormous scale while remaining relatively simple for users. Its journey from a platform supported by a handful of banks to one processing more than 24,000 crore transactions annually is therefore not just a story about payments.

 

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UPI MDR bill opens door to charges

India’s popular Unified Payments Interface (UPI) could eventually have a new revenue model after the Finance Ministry introduced a Bill in Parliament seeking to amend the Payment and Settlement Systems Act, 2007. The proposed changes would give the government the power to decide which electronic payment modes can attract a Merchant Discount Rate (MDR) and which should remain exempt.

For millions of Indians who use UPI every day, however, there is no immediate reason to worry about an extra charge. The Bill itself does not impose MDR on UPI transactions or introduce a fee for customers. UPI payments will continue to remain free under the existing system until the government issues separate notifications specifying any future charges.

At present, Section 10A of the Payment and Settlement Systems Act provides a statutory exemption from charges for notified payment modes, including UPI and RuPay debit cards. The proposed amendment seeks to remove this blanket exemption.

Instead, the government would be able to notify, from time to time, which digital payment modes should continue with zero MDR and which could attract merchant charges. It would also have the flexibility to determine the applicable rates, transaction categories and entities responsible for paying them.

In simple terms, the government is not charging for UPI today. It is creating the legal framework that could allow such charges in the future.

Merchant Discount Rate is a fee paid by a merchant to banks, payment aggregators or payment service providers for processing a digital transaction. When a customer pays a shopkeeper using a payment method that carries MDR, the merchant does not necessarily receive the entire transaction amount. A small portion can be deducted as the processing fee and shared among participants in the payments ecosystem.

UPI has operated differently. Since January 2020, the government has mandated zero MDR on UPI and RuPay debit card transactions to encourage digital payments. Merchants currently receive the full value of UPI transactions, while banks and payment companies depend partly on government incentives to cover processing costs.

The Finance Ministry’s Bill does not introduce a customer transaction fee. If MDR is introduced later, it would initially be a charge on merchants rather than UPI users.

However, that does not necessarily mean consumers would never feel its impact. Businesses could choose to absorb the additional cost, negotiate lower margins or potentially factor the cost into their pricing. The actual effect would depend on the structure eventually notified by the government.

This is why the current development is better understood as a policy change enabling future MDR, rather than an immediate return of UPI charges.

The scale of India’s digital payments ecosystem has changed dramatically since UPI was launched. According to a Parliamentary Standing Committee on Finance report released in March 2026, around 88% of India’s digital transactions are now conducted through UPI.

Banks and payment service providers process more than 23 billion UPI transactions every month, with the total value approaching ₹30 lakh crore. UPI transactions have continued to set records as more consumers and businesses shift towards digital payments.

The rapid growth has also increased the cost of maintaining the payments infrastructure. The parliamentary panel warned that the zero-MDR model could become financially unsustainable as UPI expands further.

The committee estimated that UPI could add another 600 million users and eventually handle between 100 billion and 150 billion transactions every month. Such growth would require continued investment in technology, infrastructure, cybersecurity and payment processing.

Payment companies have been pushing for a change to the zero-MDR system for some time.

The Payments Council of India had earlier urged the government to reconsider the policy, arguing that incentives provided to the digital payments ecosystem cover only a fraction of the estimated cost of maintaining and expanding UPI services.

The industry body had proposed a limited MDR structure, including a 0.3% charge on UPI transactions involving large merchants. The idea was to create a revenue stream without making everyday low-value digital payments expensive.

The latest Bill gives the government room to consider such a calibrated approach in the future.

NPCI data showed that UPI transactions touched about ₹29.88 lakh crore in July 2026, while transaction volume reached 23.66 billion. The July transaction value was around 19% higher than the same month a year earlier.

That growth explains the government’s focus on building a financially sustainable digital payments ecosystem. UPI has become deeply embedded in everyday life, from buying groceries and paying utility bills to making large purchases and transferring money between bank accounts.

If Parliament approves the amendment, the next step will be government notifications specifying whether MDR will apply, which payment modes or transactions will be covered, what rates will be charged and who will bear the cost.

For now, users can continue making UPI payments without worrying about a new transaction fee. The proposed amendment simply changes who has the power to decide the future of MDR.

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Technology

Jumpp enters UPI arena after NPCI greenlight

Indian fintech platform Jumpp has taken a major step in its growth journey after receiving approval from the National Payments Corporation of India (NPCI) to offer Unified Payments Interface (UPI) services directly through its app. The move allows users to make everyday digital payments while managing their investments and financial planning from a single platform.

Founded by Sarvjeet Singh Virk, Jumpp started as an AI-driven financial platform focused on helping users access investment products such as digital gold, mutual funds and systematic investment plans (SIPs). With the addition of UPI services, the company is expanding its role from a wealth-management app to a broader financial services platform.

Users will now be able to carry out peer-to-peer transfers, merchant payments, utility bill payments and mobile recharges without leaving the Jumpp app. The company says the integration is aimed at reducing the need to switch between multiple applications for different financial activities.

To support the new payment offering, Jumpp has partnered with YES Bank for banking infrastructure and Bharat Bill Payment System (BBPS) services. The platform also uses the Account Aggregator framework, enabling users to view and manage financial information from different accounts in one place.

The NPCI approval marks an important milestone for the startup as competition intensifies in India’s rapidly growing digital payments market. NPCI, which oversees UPI and other retail payment systems in the country, grants approval to third-party application providers that meet regulatory and operational requirements.

Jumpp believes the combination of AI-powered financial guidance and digital payments can help users make smarter financial decisions while simplifying day-to-day money management. The company is particularly focused on expanding access to digital financial services in Tier II and Tier III cities, where demand for integrated financial solutions continues to grow.

As digital payments become increasingly central to daily life, Jumpp’s entry into the UPI ecosystem signals its ambition to become a one-stop platform for spending, saving, investing and managing money across India.

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RBI proposes kill switch, delays for UPI payments

The Reserve Bank of India (RBI) has proposed new measures to reduce digital payment fraud, including a “kill switch” and a short delay for higher-value transactions.

Under the plan, payments above ₹10,000 made via UPI, IMPS, NEFT, RTGS, wallets, and net banking could be delayed by up to one hour. This cooling period would allow banks or users to detect suspicious activity and stop fraudulent transfers before they are completed.

The RBI has also suggested a “kill switch” feature that would let customers instantly disable all digital payment services linked to their bank account. This would block transactions across cards, UPI, and internet banking until reactivated through strict verification.

The measures aim to address rising cases of online fraud, especially scams where users are tricked into authorising payments themselves. The central bank says the speed of digital transactions, while convenient, has made it harder to prevent fraud in real time.

The proposals are part of wider efforts to strengthen safeguards across India’s fast-growing digital payments ecosystem while balancing speed with security.

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