Lok Sabha Passes Bill Allowing UPI Charges; Here’s What It Means for Users, Merchants and Banks

August 6, 2026

New Delhi: The Lok Sabha on Thursday passed the Payment and Settlement Systems (Amendment) Bill, 2026, paving the way for the Centre to levy charges on Unified Payments Interface (UPI) transactions in the future. The legislation empowers the government to decide whether and how Merchant Discount Rate (MDR) or other charges may be applied on digital payments.

The government clarified that the Bill does not impose UPI charges immediately. Instead, it creates a legal framework allowing the Centre to introduce charges through future notifications, depending on policy requirements.

What does the Bill mean?

The amendment allows the government to notify charges on digital payment systems, including UPI, if considered necessary. Any future decision on charging UPI transactions will be taken separately after consultations with stakeholders.

Impact on users and merchants

At present, UPI transactions will continue to remain free for users. However, merchants, payment service providers and banks could be affected if the government introduces Merchant Discount Rate (MDR) or other charges in the future.

Industry experts believe the move could help create a sustainable revenue model for banks and payment companies, which have long sought compensation for processing digital transactions.

Government’s stand

The Centre has maintained that the amendment is intended to strengthen the digital payments ecosystem and provide flexibility for future policy decisions. It has not announced any timeline for implementing UPI charges.

India’s UPI platform has witnessed rapid growth over the past few years, becoming the country’s most widely used digital payment system with billions of transactions processed every month.