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FOR THE PAST FEW DAYS, a lot of confusion has been going around about whether UPI payments in India will start costing money. This talk began after the Lok Sabha passed a new bill that touches the law around digital payment charges. Many people got worried that everyday UPI transactions, like paying a friend or a local shop, might soon come with a fee. To clear the air, the government has now stepped in with a clear message: normal UPI users have nothing to worry about, and their payments will stay completely free.

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Lok Sabha Passed The Bill, What Does It Mean For The UPI Payment Method

On Thursday, August 6, the Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026. Finance Minister Nirmala Sitharaman introduced the bill, which was passed through a voice vote without much debate. The bill makes a change to Section 10A of the Payment and Settlement Systems Act, 2007. This section currently stops banks and payment companies from charging any fee on certain digital payment methods, including UPI.

The new bill does not immediately add any charge on UPI. Instead, it gives the central government the power to decide later which digital payment methods can be allowed to carry a fee, known as the Merchant Discount Rate, or MDR. In simple words, MDR is the small cost a shop or business pays to a bank when a customer pays them digitally. Until now, this fee has been completely waived for UPI since 2020, which is one big reason why UPI became so popular with small shopkeepers and vendors across India.

Once the bill becomes law, a group called the UPI and Services Steering Committee, led by the National Payments Corporation of India, will decide if any MDR should apply, and on which kind of transactions. So while the bill removes an old legal wall, it does not turn on any new charges by itself.

See Also: Big change in UPI, card payments from April 1: RBI makes 2FA compulsory

Users Not To Worry, Government Confirms

Soon after the bill passed, several reports and social media posts began suggesting that UPI payments could soon become costly. This led to confusion among the public. The finance ministry quickly responded, calling such claims false and misleading, and said this kind of speculation only creates fear and suspicion among citizens for no real reason.

The Payments Council of India also stepped in to explain things simply. It confirmed that person-to-person UPI transfers, such as sending money to family or friends, will remain completely free, no matter what happens next. For businesses, the council said that even if an MDR is introduced later, it would likely apply only to large business transactions above ₹2,000, and even then, the fee would be a very small percentage, somewhere between 0.25 and 0.4 percent. Small shopkeepers and neighbourhood kirana stores, the council added, would continue to accept UPI payments completely free of charge.

The government also explained why this change is being made in the first place. UPI has grown massively in size, processing a record 2,366 crore transactions worth close to ₹29.9 lakh crore in July 2026 alone. Handling such a huge scale safely needs constant investment in things like fraud prevention, cybersecurity, and better technology. Allowing MDR to select large transactions, if the government eventually chooses to apply it, is being seen as one way to help fund this growth without touching the wallets of everyday users.

For the millions of Indians who use UPI every day to pay for groceries, bills, or send money to loved ones, the message from the government is simple: nothing changes for now, and person-to-person payments will always remain free. The new bill only opens the door for future decisions on business transactions, and any changes will need further rules before they apply. Until then, UPI stays exactly as it has always been, quick, easy, and free for the common user.

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