UPI is free for users; no MDR on chaiwala, sabjiwala, thelewala, says FM Sitharaman

Finance Minister Nirmala Sitharaman today reiterated that there will be no transaction charge on UPI for consumers and small businesses.

“Will consumers pay any UPI charge? No. UPI has remained free for consumers since its launch and every Indian will continue to make instant digital payment without paying a transaction charge,” Sitharaman said in Rajya Sabha during her reply to The Bankers’ Books Evidence Bill, 2026 in Rajya Sabha.

“Chaiwala (tea seller), Sabjiwala (vegetable vendor), thelewala (pushcart vendor), Patriwala (street vendor), and small businesses are not liable to pay merchant discount rate (MDR) fee. No MDR charges will be applicable on these small vendors. Small merchants and Kirana stores remain central to UPI’s inclusive growth. The government will not impose any MDR on them. There is no such intention,” FM said.

She added that any future MDR will apply only to a limited category of merchant transactions above a certain prescribed high threshold. “The vast majority of merchant transactions, including ordinary low value transactions, will continue to remain free,” FM said.

Taking a jibe at the oppositions’ protest against the enabling provisions for MDR, FM said this should have come as a relief to the opposition. “We are giving this good news to them. They should refrain from spreading misinformation outside the house,” said Sitharaman.

Meanwhile, on Saturday, the ministry of finance clarified that consumers will not have to pay any charges for using the unified payments interface (UPI), while a nominal merchant discount rate (MDR), if introduced, would apply only to a limited set of merchant transactions above a specified threshold.

“Consumers making payments will not face any transaction charges and that all person-to-person (P2P) transactions will continue to remain free,” the statement from the ministry pointed out.

FM’s comments came amid growing debate over the recent amendment to the Payment and Settlement Systems Act, 2007, which enables a framework for potential charges on certain digital payment transactions.

“As and when MDR charges are introduced, they will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs,” the ministry said.