Is Foreign Influence Behind UPI Changes? Finance Ministry Sets the Record Straight!

The Finance Ministry has firmly rejected claims that changes to the Merchant Discount Rate (MDR) in the UPI ecosystem are influenced by foreign entities. Emphasizing India's autonomy in digital payment decisions, the ministry highlighted UPI's growth since its launch in 2016. With 24.5 billion transactions processed in August 2026 alone, the ministry reassured that UPI remains free for consumers, with only larger merchant transactions incurring minimal fees. This article delves into the ministry's statements and the implications for India's digital payment landscape.

By Narendra Chaudhary Sep 16, 2026, 14:17 IST

Finance Ministry Clarifies UPI Policy Independence

New Delhi: On Wednesday, the Finance Ministry dismissed allegations suggesting that changes in the Merchant Discount Rate (MDR) within the UPI framework were influenced by foreign entities, emphasizing that India independently governs its digital payment strategies.

Since its inception in 2016, the Unified Payments Interface (UPI) has emerged as the largest real-time interoperable payment system globally, developed entirely on India's terms, as stated by the ministry on social media.

The ministry labeled such claims as "false," asserting that decisions regarding UPI are made autonomously, aimed at fostering a self-sufficient, inclusive, and affordable digital payments landscape.

In August 2026 alone, UPI facilitated an impressive 24.5 billion transactions. To maintain the system's sustainability, security, and innovation, a nominal fee on high-value merchant transactions is implemented to enhance infrastructure, bolster cybersecurity, and support small merchants in rural and Tier III–VI regions, as per government sources.

The Finance Ministry highlighted that the new framework ensures that resources from higher-value transactions are reinvested to aid small businesses and fortify digital payment systems nationwide.

UPI Remains Cost-Free for Consumers

UPI Remains Free for Consumers

UPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges.

Key Facts:
No charges on P2P: Person-to-Person transfers are always free, regardless of amount.
Small… pic.twitter.com/PyQ7hotNMN

— Ministry of Finance (@FinMinIndia) September 16, 2026

The Finance Ministry reiterated that UPI transactions remain free for users. Whether transferring money to friends, making purchases, or scanning QR codes, no charges apply.

According to the ministry, "Person-to-Person transfers are always free, regardless of the amount. Merchants earning up to Rs 1 lakh monthly through UPI QR codes incur no fees. Over 95% of merchant transactions are below Rs 2,000, which also remain free."

Only transactions exceeding Rs 2,000 for larger merchants incur a minimal fee of 0.4%, significantly lower than credit card fees or other network charges.

For transactions related to railways, fuel, telecom, bill payments, and insurance, a flat fee of Rs 5 applies for amounts above Rs 2,000, while mutual fund and securities payments attract a mere 0.02%, capped at Rs 300.

The ministry further clarified that merchants cannot transfer MDR costs to customers, and UPI applications are prohibited from imposing platform charges.