UPI is and will remain free for consumers: PhonePe CEO amid charge concerns

Sameer Nigam, CEO of PhonePe, on Saturday said in a social media post that consumers would continue to use UPI free of charge, even as questions around charges for consumers and merchants continued

PhonePe CEO Sameer Nigam on Saturday said consumers will not be charged for making Unified Payments Interface (UPI) payments, amid growing concerns over possible charges on transactions.

 

“UPI is and will remain free for all Indian consumers! Consumers will NOT BE CHARGED anything for making UPI payments,” Nigam said in a post on X.

 

The clarification came after the Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends the Payment and Settlement Systems Act, 2007. The changes allow the government to decide which digital payment methods remain free and which can attract charges.

UPI charges

The Payments Council of India (PCI) on Friday said consumers would continue to use UPI free of charge. It also said small merchants would not have to pay MDR for accepting UPI payments.

 

 

“Merchant service charges, where applicable, are commercial arrangements between merchants and payment service providers. They do not mean that consumers pay to use digital payments,” PCI said in a post on X.

 

The council said such charges, where applicable, would be commercial arrangements between merchants and payment service providers. Customers would not have to pay charges for transactions made at large merchants, it said.

 

Moneycontrol reported that the current proposal could involve an MDR of 0.25-0.4% on certain business-directed UPI transactions above ₹2,000. Person-to-person payments would not be covered.

PCI on UPI infrastructure

In its Friday statement, PCI said UPI was launched in 2016 and that banks, fintech companies, NPCI and RBI have since invested in technology, cybersecurity, fraud prevention, compliance, innovation and customer support.

 

“Operating a national payment infrastructure involves continuous investment in technology, fraud prevention, cybersecurity, compliance, customer support and innovation,” PCI said.

 

It added that banks and payment service providers while consumers use UPI without transaction charges.

UPI transactions rise

UPI processed 23.65 billion transactions worth ₹29.87 trillion in July, compared with 20 billion transactions worth ₹24.85 trillion in July 2025.

 

Reserve Bank of India Governor Sanjay Malhotra on Wednesday said discussions on the structure of a potential MDR were still premature and that continued investment was required to strengthen the real-time payments system. However, he also noted that 'someone has to pay the cost" of running India's digital payments infrastructure, adding that the cost of maintaining UPI payments cannot be ignored indefinitely.

 

Responding to questions on the proposal to levy a Merchant Discount Rate (MDR) on UPI payments above ₹2,000, he said the central bank's focus remains on making digital payments accessible, affordable, safe and sustainable.

 

“It is very premature to talk right now. The government is still carrying out the amendment. The costs have to be paid by someone. We all want that this public infrastructure should continue to strengthen. Let's wait and watch for further developments on this,” Malhotra said.

 

“Please keep in mind that ultimately it is the consumer in some way or the other who's paying. So, it may not be the same consumer. It may be the general economy, and you don't get to see it directly,” he added.