Govt Plans Small Fee on Big UPI Payments to Large Shops, General Public Safe

The Central Government has introduced a new plan to allow small service charges on select high-value UPI payments made to big business houses and large online platforms. Under proposed changes to tax laws in Parliament, the Ministry of Finance will now have the power to decide which digital payment methods remain completely free and which ones can attract a processing fee. Officials have reassured ordinary citizens that normal day-to-day UPI usage will remain totally free.

Under the new proposal, banks and payment apps like PhonePe, Google Pay, and Paytm will be allowed to charge a small Merchant Discount Rate (MDR) of less than 0.5% only on transactions above ₹2,000 made to large commercial businesses. Small roadside vendors, local neighborhood kirana stores, and small shopkeepers with limited yearly income will be fully exempt from paying these charges. Personal money transfers between friends, family members, or personal bank accounts will also continue to carry zero cost.

The government had originally removed all service fees on UPI in 2020 to encourage people across India to adopt digital payments. While this move made UPI extremely popular, banks and payment companies have been complaining that managing servers, stopping digital fraud, and maintaining payment networks without earning any revenue has become financially difficult. By allowing a small fee on large company purchases, the government aims to keep the digital payment system running smoothly while ensuring that ordinary buyers and small shopkeepers do not face any extra burden.