Mumbai: In India, people use UPI everywhere – at tea stalls, shops, malls, for electricity bills and even house rent. UPI has made life easy and fast. But this “free” system is costly for banks and payment companies. Every UPI transaction costs them around 2.
In October, India crossed 20 billion digital payments. About 85% of these were done through UPI. Earlier, the government spent 3,900 crore in 2023–24 to support digital payments. But for 2025–26, this amount has been cut to just 427 crore. Experts say India may need 8,000 to 10,000 crore in the coming years to keep UPI strong and safe.
Why are UPI fees being discussed?
Right now, under the “Zero MDR” rule, merchants do not pay any fee for UPI. This helps small shops and common people. But banks and fintech companies face heavy costs, mainly because of big businesses that handle large volumes of payments.
More money is needed to:
Expand UPI in villages
Improve cyber security
Build better digital systems
So, the plan may be:
UPI will remain free for normal users and small shops
Big merchants with yearly business above 10 crore may pay a small fee of 0.25% to 0.30% per transaction
This will help the UPI system survive and grow in the future.
Now, everyone is waiting for Budget 2026. Finance Minister Nirmala Sitharaman’s decision will decide whether UPI stays fully free or moves to a low-fee model for big businesses.