UPI remains free, but payment infrastructure still has a cost

Small merchants will not pay a new consumer-facing fee for ordinary UPI transactions under the current position of the Payments Council of India. The clarification follows speculation about whether digital payments could become more expensive.

UPI is free at the customer level, but the infrastructure is not costless. Banks, fintech companies, NPCI and payment providers fund cybersecurity, fraud prevention, uptime and technical upgrades.

A recent legal change gives the government future power to decide through notification which electronic payment methods retain zero merchant discount rate. It does not itself impose an MDR on UPI.

For small shops, the distinction matters. A future change would need to explain who pays and how the smallest merchants are protected. For now, merchants should continue checking settlement records, fraud alerts and account security rather than reacting to unverified fee claims.