UPI Charges 2026: What the New Law Actually Did

Last reviewed: 3 September 2026.

In August 2026 a wave of forwarded messages told people that UPI was about to start eating a slice of every payment they made. The law that triggered the panic did something much narrower and much duller. It moved a decision from one place in the statute book to another. It did not create a charge, name a rate, or set a date, and none of those three things exists today.

The single most useful sentence in this whole story is the government's own: as and when a Merchant Discount Rate is introduced, it would apply only to a limited set of merchant transactions, above a threshold, at a nominal rate. That is a description of a decision nobody has taken yet, not a description of something that has happened.

Section 10A is headed Bank, etc., not to impose charge for using electronic modes of payment. India Code records that it was inserted by Act 23 of 2019, section 204, with effect from 1 November 2019.

Its operative words are worth reading slowly, because most coverage skipped them. It says that notwithstanding anything contained in the Act, no bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961.

Three details in that sentence do all the work.

• It protects both ends of the payment. The person making the payment is the customer. The person receiving it is the merchant. Section 10A shields both.
• It binds banks and system providers. Those are the parties forbidden from imposing a charge. The section does not, in its own words, regulate what a shop decides to charge for a cup of tea.
• It never uses the words Merchant Discount Rate. The section bans a charge on the payer or the payee for the protected modes, and that ban is what has kept UPI and RuPay debit free of a Merchant Discount Rate in practice. The Merchant Discount Rate framing comes from the Ministry of Finance, not from the text.

The protected list itself was never written into the Payment and Settlement Systems Act. It sat inside a cross reference to a provision of income tax law. That is the piece the 2026 amendment moved.

The change came through the Taxation and Other Laws (Amendment) Bill, 2026. It is one Bill, not a separate payments statute. PRS Legislative Research records that it amends the Income-tax Act, 2025, and also amends the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007. It was introduced in the Lok Sabha on 4 August 2026, passed by the Lok Sabha on 6 August 2026, and passed by the Rajya Sabha on 10 August 2026.

What it does to Section 10A is a swap. Until now, the protected list of payment modes was fixed by a cross reference: Section 10A pointed at whatever modes were prescribed under section 269SU of the Income-tax Act, and the only way to change the list was to change that tax rule. The amendment removes the fixed cross reference and lets the Central Government specify the protected modes by notification instead.

That is an enabling provision. An enabling provision hands a power to somebody. It does not exercise the power. Before the amendment, the protected list was locked to a tax law rule. After it, the Central Government can publish a notification naming the protected modes. Until that notification is published, there is nothing new to read, and no charge has been switched on by the amendment itself.

The Ministry of Finance said so directly in a press release headed No Charges for UPI Users, issued on 8 August 2026. It stated that consumers making payments will not face any transaction charges, that all person to person transactions will continue to be free of charge, and that the amendment is an enabling provision designed to keep UPI sustainable rather than to charge users. The same release records the scale of what is at stake: UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 alone.

This is the distinction that most of the panic missed, and it matters more than the legal detail.

A Merchant Discount Rate is a merchant side cost. It is a fee that a merchant's bank or payment provider keeps out of the money it settles to the merchant. If you pay Rs 500 at a shop, you pay Rs 500. The merchant is the one who receives slightly less than Rs 500. Nothing extra is pulled out of the payer's account. That is why the Finance Minister's position has been that a Merchant Discount Rate applies to merchants and not to end users.

The government has also said that if a Merchant Discount Rate is ever introduced, it would cover only a limited set of merchant transactions above a threshold, at a nominal rate lower than card rates, and that the vast majority of transactions would stay free even for merchants. No threshold and no rate have been published, so treat any figure you see circulating as unverified.

Two honest caveats belong here. First, Section 10A binds banks and system providers. It says nothing about how a shopkeeper prices goods, so a merchant facing a new cost has ordinary commercial ways of responding to it, and those responses are not a charge imposed by a bank. Second, the decision has not been taken. The Ministry of Finance has said the UPI and Services Steering Committee headed by NPCI will decide on the Merchant Discount Rate, if any. The words “if any” are the government's own.

This article can tell you the position as of 3 September 2026. It cannot promise the position a year from now. So here is how to check for yourself, in the order that works.

1. Look for a gazette notification, not a headline. A real change arrives as a numbered notification published in the Gazette of India. Search the official eGazette portal for a notification issued by the Ministry of Finance under the Payment and Settlement Systems Act, 2007.
2. Check the Ministry of Finance press releases. Government announcements on this are released through the Press Information Bureau, and the PIB Fact Check page exists precisely to knock down viral claims.
3. Check the Reserve Bank of India. Anything that binds banks and payment system providers usually shows up as a circular on the RBI website.
4. Apply the forward test. A genuine change has a notification number, a date, and a gazette reference you can look up. A fake has a screenshot, a confident percentage, no source, and an instruction to forward it onward. The Ministry of Finance itself asked citizens to rely only on official information from the Ministry, the RBI and NPCI, and not to forward unverified messages.
5. If you still cannot find it, ask in writing. File an RTI application with the Department of Financial Services using the letter below. India Code's own entry for Section 10A records the administering department as the Department of Financial Services under the Ministry of Finance, which is why that is the right address.
6. Diarise the reply date. A public authority has 30 days. The Timeline Tracker and the RTI Deadline Calculator will keep the dates straight for you.

To
The Central Public Information Officer
Department of Financial Services
Ministry of Finance
Government of India
[Office address as published on the Department RTI page]

Subject: Information under Section 6(1) of the Right to Information Act, 2005
regarding Section 10A of the Payment and Settlement Systems Act, 2007

Sir/Madam,

Please provide the following information:

1. Whether the amendment to Section 10A of the Payment and Settlement Systems
   Act, 2007 carried out through the Taxation and Other Laws (Amendment) Bill,
   2026 has been brought into force. If yes, please supply a copy of the
   commencement notification with its number and date.

2. A copy of any notification issued by the Central Government specifying the
   electronic modes of payment for the purposes of Section 10A of the said Act
   as amended, along with its number and date of publication in the Gazette of
   India. If no such notification has been issued as on the date of this
   application, please state that clearly.

3. Whether any Merchant Discount Rate has been notified, approved or fixed for
   Unified Payments Interface transactions or for RuPay debit card transactions
   as on the date of this application. If yes, please supply the document.

4. Copies of the agenda, minutes or recorded decisions of the UPI and Services
   Steering Committee relating to the Merchant Discount Rate, from 1 August 2026
   to the date of this application.

5. Copies of correspondence between this Department and the Reserve Bank of
   India or the National Payments Corporation of India on the subject of a
   Merchant Discount Rate on UPI, from 1 August 2026 to the date of this
   application.

6. The name and designation of the Central Public Information Officer who holds
   the information sought at points 1 to 5 above.

If any part of this request is held by another public authority, please transfer
that part under Section 6(3) of the RTI Act, 2005 within five days.

I enclose the prescribed application fee. Please supply the information within
30 days as required by Section 7(1).

Yours faithfully,
[Name]
[Full postal address]
[Phone / email]
[Place, Date]

You can file this online through RTI Online, or on paper to the officer named on the Department of Financial Services RTI page, which publishes the current list of Central Public Information Officers. The AI RTI Drafter will format the application for you, how to file an RTI in India covers the basics, and the RTI Fee Calculator tells you what to pay. If nothing arrives in 30 days, that is a deemed refusal and you can use the First Appeal Builder.

If an amount you did not expect leaves your account on a UPI payment, that is far more likely to be an ordinary billing or fraud issue than a policy change. Keep the evidence before you complain.

• The transaction receipt from your UPI app, including the UTR or reference number.
• A screenshot showing the amount you entered and the amount actually debited.
• The bank statement line for the debit, with the narration.
• The merchant's bill or invoice for the same payment.
• The written complaint you raised with your bank or payment app, and the complaint reference number it gave you.
• The date and time of every call or chat, with the name of the person who handled it.

• Treating a passed Bill as a charge that has started. Parliament passing an enabling provision and the government notifying something under it are two different events. Only the first has happened.
• Confusing a merchant cost with a customer deduction. A Merchant Discount Rate is deducted from what the merchant receives. It is not added to what the payer sends.
• Believing a percentage figure. No rate has been published. Any figure in circulation is somebody's guess presented as fact.
• Assuming NPCI has already decided. The Ministry of Finance said the committee headed by NPCI will decide on the Merchant Discount Rate, if any. No decision has been announced.
• Thinking Section 10A protects you against a shop's pricing. It binds banks and system providers, not shopkeepers.
• Trusting a screenshot without a notification number. If it has no number, no date and no gazette reference, it is not a notification.
• Assuming the Act names UPI. Section 10A points to a list of modes decided elsewhere. Before the amendment that list came from tax law. After it, the list comes from a government notification.

No. No Merchant Discount Rate has been notified for UPI, and the Ministry of Finance has stated that consumers making payments will not face any transaction charges. Nothing in the 2026 amendment deducts anything from a payer.

Both Houses passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends Section 10A of the Payment and Settlement Systems Act, 2007. In effect, the protected list of payment modes stops being fixed by a cross reference to section 269SU of the Income-tax Act and becomes something the Central Government can specify by notification. Passage by both Houses and commencement are two different events, and no notification specifying the protected modes has been published. Point 1 of the RTI letter above asks the Department of Financial Services to confirm both in writing.

No. It is one Bill. PRS Legislative Research records that the Taxation and Other Laws (Amendment) Bill, 2026 amends the Income-tax Act, 2025, and also amends the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007. Reports describing a standalone payments Act are wrong.

It is a fee kept by the merchant's bank or payment provider out of the money settled to the merchant on a digital payment. It sits on the merchant side. The Finance Minister's position has been that a Merchant Discount Rate applies to merchants and not to end users.

No. The Ministry of Finance has stated that all person to person transactions will continue to be free of charge.

No decision has been announced. The Ministry of Finance said that the UPI and Services Steering Committee headed by NPCI will decide on the Merchant Discount Rate, if any. The phrase “if any” is the government's own.

India Code records that Section 10A was inserted by Act 23 of 2019, section 204, with effect from 1 November 2019.

It will appear as a numbered notification in the Gazette of India, backed by a Ministry of Finance announcement and usually an RBI circular to banks. If you cannot find those three things, nothing has changed. The RTI letter above asks the question directly.

• Ministry of Finance press release, No Charges for UPI Users, 8 August 2026 - the statements on no charges for users, free person to person transactions, a future Merchant Discount Rate applying only to a limited set of merchant transactions above a threshold at a nominal rate, the UPI and Services Steering Committee headed by NPCI deciding on it if any, UPI being free for merchants and citizens since January 2020, and the July 2026 volume of 2,366 crore transactions worth Rs 29.9 lakh crore.
• Section 10A, The Payment and Settlement Systems Act, 2007, on India Code - the full text of the section, its heading, the footnote recording insertion by Act 23 of 2019, section 204, with effect from 1 November 2019, and the entry recording the Department of Financial Services under the Ministry of Finance as the administering department.
• PRS Legislative Research bill track, The Taxation and Other Laws Amendment Bill, 2026 - that it is a single Bill amending the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007, introduced in the Lok Sabha on 4 August 2026, passed by the Lok Sabha on 6 August 2026 and by the Rajya Sabha on 10 August 2026.
• RTI page of the Department of Financial Services, Ministry of Finance - the current appointment orders listing Central Public Information Officers and Appellate Authorities.
• The Right to Information Act, 2005 - sections 6(1), 6(3) and 7(1) used in the sample letter.

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