No UPI fee for customers, says FM Nirmala Sitharaman; MDR decision pending

Finance Minister Nirmala Sitharaman on Thursday clarified that UPI users will not have to pay any Merchant Discount Rate (MDR) if such a fee is introduced, saying the charge would apply only to merchants.The clarification comes amid concerns that the government was planning to impose charges on customers for making UPI payments.In a post on X, Sitharaman said MDR would help banks and fintech companies invest more in payment infrastructure, innovation and security, with all UPI users benefiting from these improvements.MDR is a fee paid by merchants to banks and payment service providers for processing digital transactions. Customers do not pay this charge.The finance minister also said no final decision has yet been taken on introducing MDR for UPI transactions.According to her, the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), will consider the matter only after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes changes to the Payment and Settlement Systems Act, 2007.The clarification marks the government’s first official response on the proposed UPI MDR framework after the issue sparked a political debate.Sitharaman also criticised the Congress party, saying the issue could have been discussed in Parliament during the debate on the Bill instead of being raised outside the House.

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