UPI to remain free for P2P transactions irrespective of amount: Finance Ministry

The union finance ministry today said UPI will remain free for person-to-person transactions. The ministry also said the MDR charges will be applicable only on high value merchant transactions. 

"For person-to-person (P2P) transactions, there will be no charges at all, irrespective of transaction value. P2P transactions constitute 37% of the total UPI transaction in volume terms and 70% in value terms," the ministry said in a release. 

Charges will apply only to person-to-merchant (P2M) transactions exceeding ₹2,000, the ministry said. 

The clarification came from the ministry post the announcement of the fee structure on UPI issued by the NPCI. 

Referring to the NPCI circular issued today, the ministry said that for person-to-person (P2P) transactions, there will be no charges 

and a nominal MDR of 0.4% will be levied on P2M transactions above ₹2,000. "This commission will be shared amongst the payment ecosystem partners including banks and app providers," it said. 

What will be the charge on high value deals, essential services? 

"For high-value transactions of ₹75,000 and above, MDR will be capped at ₹300 per transaction," NPCI said. 

"Railways, telecom, insurance, fuel sectors, agriculture inputs etc will pay a flat MDR of ₹5 per transaction above ₹2,000," it added. 

"The Government of India has amended the Payment and Settlement Systems (PSS) Act, 2007 empowering the government to notify specific electronic payment modes where no charges shall apply. This amendment provides the legal foundation to ensure affordability and transparency in digital transactions," the ministry said in a release. 

"On 14 September 2026, the Central Government issued a notification under this framework, specifying that Unified Payments Interface (UPI) transactions up to ₹2,000 will attract zero Merchant Discount Rate (MDR)," it added. 

"In exercise of the powers conferred by section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007), the Central Government hereby specifies the following electronic modes of payment, namely:– (i) Debit Card powered by RuPay; and (ii) Unified Payments Interface (UPI) transactions up to ₹2,000,” said the gazette notification issued by the ministry of finance last night," the ministry's notification issued yesterday said. 

“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 specified in paragraph above,” the notification added.