Indian government clarifies: UPI person-to-person transactions will remain free
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Why in news
The Indian government clarified that person-to-person UPI transactions will remain free to ensure the sustainability of the digital payment ecosystem.
Background
The government clarified on August 8, 2026, that UPI person-to-person transactions remain free. Future Merchant Discount Rates (MDR) would only apply to specific high-value transactions at nominal rates lower than debit/credit cards.
Facts for Prelims
- BodyNPCI (National Payments Corporation of India) is the body responsible for overseeing UPI operations.
- Act / BillPayment and Settlement Systems Act, 2007 is the primary legislation governing electronic payment systems in India.
- FactMDR (Merchant Discount Rate) is the fee paid by a merchant to a bank or payment processor for processing a transaction.
For Mains
Q. Discuss the significance of the Unified Payments Interface (UPI) in promoting financial inclusion and the challenges of ensuring its long-term fiscal sustainability.
Dimensions to cover in your answer
- financial inclusion
- digital public infrastructure (DPI)
- fiscal sustainability of UPI
- monetary policy impact
Keywords: Financial Inclusion · Digital Public Infrastructure · Merchant Discount Rate · Sustainable Ecosystem · Payment Systems
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