Can We Expect Transaction Charges on UPI? An Explainer

Concerns Over UPI Transaction Fee

Recently, the Reserve Bank of India (RBI) came out with a discussion paper and sought the public’s views on potential charges levied in UPI payment systems. There was a flurry of opinions, thoughts, and anxieties about this proposal. The Finance Ministry had to clarify that the Government is not considering any UPI transaction charges.

UPI is one of India’s most used and safest payment systems. Developed by National Payments Corporation of India (NPCI), UPI allows users to send and receive funds using a mobile app.

The Govt’s contribution to promote UPI payments

The RBI invited stakeholders to share their opinions if the fee paid by merchants, also referred to as Merchant Discount Rate or MDR, and if acquirer banks should be brought under the ambit of UPI transactions. This paper sought stakeholders’ feedback on the fee structure for an array of digital payment solutions.

They shared a questionnaire comprising 40 questions and asked stakeholders to submit it by 3rd October 2022. As per RBI officials, the feedback thus received would be used as a policy guideline and to create intervention strategies.

RBI also clarified that no specific view or opinion had been taken on the issues mentioned in the discussion paper. However, it covered broad aspects like charges in payment systems like Real Time Gross Settlement or RTGS, National Electronic Funds Transfer or NEFT, Immediate Payment Service or IMPS, and Unified Payments Interface or UPI, besides other payment instruments like credit cards, debit cards, and PPIs or prepaid payment instruments.

MDR in UPI as of today

The MDR or the Merchant Discount Rate is a fee paid by a merchant when accepting digital transactions. A merchant must pay MDR on every transaction when they accept payments through debit cards, credit cards, digital wallets, and net banking. Currently, there is no MDR on UPI because of its 45 days interest-free period and unsecured nature. Moreover, it also helps in maintaining liquidity.

Although there has been a long-standing demand for MDR on UPI, the Government has mandated a zero-charge framework for UPI transactions. Thus, there are nil charges on UPI transactions.

As per official NPCI data, there were 628.84 crore UPI transactions in July alone, valued at Rs 10.63 lakh crore. The Reserve Bank of India recently plans to extend UPI to include credit cards and NPCI’s RuPay cards. UPI stems from the idea to provide fast, secure and hassle-free payments, and thus in this evolving payment space Innoviti too has a unique solution called upi deeplink.



As per the Government, UPI services are a ‘digital public good.’ The Ministry of Finance had to clarify that the concerns related to cost recovery among service providers shall be met through other means. Currently, the Government is not considering levying any charges for UPI services. Many steps have been taken as a Government contribution to promote UPI payments. Innoviti provides a safe and secure payment platform for quick and hassle-free transactions.


The Ministry of Finance considers UPI payment as a digital public good, and as such, it has not been brought under the ambit of MDR.

UPI transactions are free but are usually limited to 20 transactions. The limit of transactions per UPI transaction is capped at INT 1 Lakh. This upper limit may vary from one bank to another. Thus, this limit may range between Rs 10,000 to Rs 1 Lakh. The transaction limit per day is Rs 1 Lakh.

UPI is the best payment system, as these transactions can be made free of charge. Moreover, the UPI app is backed by the Reserve Bank of India. It is also safer than IMPS and other payment transaction platforms.