Daijiworld Media Network - New Delhi
New Delhi, Aug 18: The Indian government has reaffirmed that it has no plans to levy transaction charges on payments made through the Unified Payments Interface (UPI), a key pillar of the country’s digital payment ecosystem.
Responding to a question in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary clarified that, under current law, both payers and recipients using certain electronic payment methods—including UPI—are protected from such charges. This safeguard is provided by Section 10A of the Payment and Settlement Systems Act, 2007, which prohibits banks and system providers from imposing fees on transactions conducted via modes specified under Section 269SU of the Income-tax Act, 1961.
The Central Board of Direct Taxes (CBDT) had earlier officially recognized UPI and RuPay debit cards as prescribed electronic payment methods under this section.
Although a 2019 circular from the National Payments Corporation of India (NPCI)—the body responsible for managing UPI—allowed acquiring banks to charge a Merchant Discount Rate (MDR) of 0.30% on transactions, this provision does not override the legislative protections for consumers and merchants.
To sustain the rapid expansion of UPI and support its ecosystem, the government has provided substantial financial backing. Between financial years 2021-22 and 2024-25, it rolled out an incentive scheme totaling around Rs 8,730 crore to help banks and payment service providers maintain and scale UPI infrastructure.
The results of these efforts have been significant. UPI transactions have surged from 92 crore in FY 2017-18 to an astonishing 18,587 crore in FY 2024-25—reflecting a compound annual growth rate (CAGR) of 114%. The total transaction value skyrocketed from Rs 1.10 lakh crore to Rs 261 lakh crore over the same period.
July 2025 marked another record milestone, with UPI crossing 1,946.79 crore transactions in a single month for the first time.
Digital payments overall have seen remarkable growth across the country. The volume of digital payment transactions increased from 2,071 crore in FY 2017-18 to 22,831 crore in FY 2024-25, growing at a CAGR of 41%. In value terms, the total rose from Rs 1,962 lakh crore to Rs 3,509 lakh crore.
These numbers underscore UPI’s role as a transformative force in India’s journey toward a less-cash economy, with continued government support ensuring accessibility and affordability for all users.