UPI transaction fee has been a hot topic in the country for quite a while now and the government has clarified that there is no proposal to impose a fee on Unified Payments Interface (UPI) transactions, putting to rest speculation that individuals may soon have to pay for digital payments. As mentioned in a report by The Indian Express, in a written reply to the Lok Sabha on Monday, Minister of State for Finance Pankaj Chaudhary said, “Presently, there is no such proposal to impose transaction charges on UPI.” The clarification comes after comments from Reserve Bank of India (RBI) Governor Sanjay Malhotra sparked concerns that UPI may cease to be free.
While users will not pay a fee for UPI transactions, some banks have already introduced charges for payment aggregators. (MINT) Government reaffirms position
Addressing questions in Parliament, Chaudhary noted that the government has consistently supported free UPI transactions to boost digital payments. He highlighted that under the ‘Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions’, the government has already disbursed around ₹8,730 crore over the last four years to subsidise transaction costs.
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The Indian Express further reveals that the finance ministry had also dismissed similar rumours in June, calling them “completely false, baseless, and misleading.”
RBI Governor’s remarks stirred debate
At the Financial Express BFSI Summit in Mumbai on 25 July, RBI Governor Malhotra remarked that while UPI being free had delivered “good fruits,” any payment system had to be financially sustainable. His statement was widely interpreted as a hint that transaction charges could be introduced.
However, at a post-monetary policy press conference on 6 August, he clarified his remarks. “I never said that it cannot remain free forever… The government is subsidising it. Someone is paying the cost. But I never said users will have to pay,” he stressed.
Banks begin charging aggregators
While users will not pay a fee for UPI transactions, some banks have already introduced charges for payment aggregators. According to reports, ICICI Bank began levying a 0.02–0.04% fee per transaction (capped at ₹6– ₹10) from 1 August. The fee, however, does not apply if payments are settled directly into an ICICI merchant account. Private lenders such as YES Bank and Axis Bank are also said to have adopted similar practices.
These charges target payment firms like Razorpay, PayU, and Pine Labs, who act as intermediaries between merchants and banks.
UPI usage continues to surge
Despite speculation, the popularity of UPI remains unmatched. In July 2025, India recorded 19.47 billion UPI transactions worth ₹25.08 lakh crore, reflecting a 35% increase in volume and a 22% rise in value compared to the same month last year.
With digital payments now a cornerstone of India’s financial ecosystem, the government’s latest clarification assures individuals that UPI payments will continue to remain free, at least for now.