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Last updated: 8 August 2026, 9:20 p.m. IST
PhonePe CEO Sameer Nigam and the Payments Council of India (PCI) have clarified that consumers will not be charged for using UPI amid renewed debate over possible Merchant Discount Rate (MDR) charges. This article explains what is confirmed, what the Lok Sabha-passed Bill actually changes, and what remains undecided.
No UPI User Charge Has Been Announced
No UPI user charge has been announced as of 8 August 2026. PhonePe CEO Sameer Nigam said UPI “is and will remain free for all Indian consumers” and that consumers will not be charged for making UPI payments. The Payments Council of India has separately said consumers and small merchants will continue to use UPI without transaction charges.
The clarification comes after the Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on 6 August 2026, triggering questions about whether the change could eventually allow charges on certain UPI transactions.
Bottom Line
Google Pay, PhonePe and Paytm users do not have to pay a new UPI transaction fee based on the current developments. No consumer charge has been notified.
The important distinction is that the Bill changes the legal framework; it does not itself announce a UPI fee, MDR rate, transaction threshold or start date.
What Happened: UPI Charges Timeline
The latest developments have unfolded over just a few days.
6 August 2026: Lok Sabha Passes the Bill
The Taxation and Other Laws (Amendment) Bill, 2026 was passed by the Lok Sabha on 6 August.
The legislation proposes changes to Section 10A of the Payment and Settlement Systems Act, 2007, which is at the centre of the current UPI charges debate.
7–8 August 2026: Payments Council Clarifies Position
The Payments Council of India subsequently clarified that UPI will remain free for consumers and small merchants.
The industry body said small merchants, including kirana stores, would not be required to pay MDR for accepting UPI payments.
8 August 2026: PhonePe CEO Responds
On 8 August, PhonePe CEO Sameer Nigam publicly addressed the concern over possible consumer charges.
His message was direct: consumers would not be charged for making UPI payments.
Current Position
As of 8 August 2026:
- No consumer UPI fee has been announced.
- No MDR rate has been officially notified.
- No transaction-value threshold has been notified.
- No merchant-turnover threshold has been notified.
- No consumer-facing implementation date has been announced.
PhonePe CEO Sameer Nigam’s Clarification
What Sameer Nigam Said
PhonePe CEO Sameer Nigam addressed the issue on 8 August amid growing concern over whether UPI payments could become chargeable.
He said:
“UPI is and will remain free for all Indian consumers!”
Nigam also stated that consumers would not be charged for making UPI payments. His statement was reported by multiple outlets following the Lok Sabha passage of the Bill.
For consumers, the message is significant because PhonePe is one of India’s largest UPI platforms and is directly involved in the payment ecosystem.
Important: This Is an Industry Clarification
Nigam’s statement should nevertheless be understood in the correct context.
It is:
- A statement from the CEO of a major UPI payment platform.
- An assurance about the consumer-facing UPI experience.
- Consistent with the Payments Council of India’s clarification.
It is not itself a government notification, legislation or statutory amendment.
Therefore, it should not be interpreted as changing the legal text of the Bill.
The legal position must continue to be determined by the legislation and any subsequent official notifications.
Payments Council of India’s Clarification
What the Payments Council Said
The Payments Council of India has also sought to clarify who could potentially bear any future merchant-side charges.
According to the industry body’s clarification:
- Consumers will continue to use UPI free of cost.
- Small merchants, including kirana stores, will not be required to pay MDR for accepting UPI payments.
- Any merchant service charge involving larger commercial merchants, if introduced, would be a commercial arrangement between merchants and payment service providers.
- Such a merchant-side arrangement would be different from a fee directly deducted from the customer.
This distinction is particularly important because MDR and a consumer transaction fee are not the same thing.
A merchant-side processing charge, if introduced for a particular category, would be a cost associated with accepting payments. It would not automatically mean that the customer is charged every time they make a UPI payment.
Small Merchants Remain a Key Point
The Payments Council specifically addressed smaller businesses.
Its clarification says small merchants, including kirana stores, will remain free from MDR for accepting UPI payments.
This matters because UPI has become an important payment method for small retailers, street vendors and other businesses that rely on QR-code payments.
What the Lok Sabha-Passed Bill Actually Changes
The Bill needs to be separated from the statements made by PhonePe and the Payments Council.
The Taxation and Other Laws (Amendment) Bill, 2026 proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007.
The amendment changes the way the law refers to electronic payment modes.
The existing framework refers to electronic modes prescribed under Section 269SU of the Income-tax Act.
The proposed wording instead refers to:
“one or more electronic modes of payment as the Central Government may, by notification, specify.”
The practical significance is that the legal framework would provide the Central Government with the ability to specify electronic payment modes through notification.
What the Bill Does Not Announce
The Bill does not itself specify:
- A UPI MDR percentage.
- A consumer transaction fee.
- A transaction-value threshold.
- A merchant-turnover threshold.
- A date on which charges would begin.
- A specific category of UPI users who must pay a fee.
That is why saying “UPI charges have started” would go beyond what the legislation currently establishes.
Why the Word “Notification” Matters
The proposed wording gives importance to a future government notification.
In simple terms, the amendment creates a legal framework under which the government may subsequently specify electronic payment modes.
That does not mean a charge automatically starts on the day the Bill is passed.
Any future charging framework would need to follow the applicable legal and administrative process.
Who Pays and Who Does Not?
Position as of 8 August 2026
| Category | Current Position |
|---|---|
| Consumers making UPI payments | No user charge has been announced |
| P2P transfers | No charge has been notified |
| Consumers paying merchants | No user-side fee has been announced |
| Small merchants | Payments Council says they will remain free |
| Large commercial merchants | Future commercial arrangements remain undecided |
| Banks / Payment Service Providers | No MDR rate or start date has been notified |
The table reflects the distinction between confirmed current conditions and potential future arrangements.
For consumers, the key point remains unchanged: there is no newly notified UPI transaction fee that Google Pay, PhonePe, Paytm or other UPI users must pay because of the Bill’s Lok Sabha passage.
What Is Still Undecided?
Despite the recent clarifications, several important questions remain open.
MDR Rate
No final MDR percentage has been announced in the Bill.
Figures circulating in media reports should therefore not be treated as a final government decision.
Transaction-Value Threshold
There is currently no final threshold in the Bill saying that UPI transactions above a particular amount will automatically attract a fee.
Reports may discuss possible thresholds, but they should not be presented as confirmed policy unless and until an official notification establishes them.
Merchant-Turnover Threshold
Similarly, there is no final merchant-turnover threshold in the Bill determining which businesses would be charged.
Payment Modes Covered
The proposed amendment uses a framework under which the Central Government may specify electronic modes through notification.
The exact scope of any future notification therefore remains important.
Implementation Date
No consumer-facing implementation date for a new UPI charge has been announced.
Consumers should therefore avoid treating a reported future date as confirmed unless it appears in an official notification.
Final Legislative Status
The Bill’s passage by the Lok Sabha is one stage of the legislative process.
The Rajya Sabha status, presidential assent and Gazette notification should be re-verified before publication and whenever this article receives a major update.
Misconceptions vs Verified Position
| Viral Claim | Verified Position |
|---|---|
| Users will now pay for every UPI transaction | No consumer fee has been announced. |
| PhonePe has confirmed a new user charge | PhonePe CEO Sameer Nigam said consumers will not be charged. |
| The Bill immediately imposes MDR | The Bill does not specify an MDR rate or start date. |
| Small shops will have to pay UPI charges | Payments Council says small merchants will remain free. |
| ₹2,000+ payments will definitely attract a fee | No final threshold has been notified. |
| Merchant-side MDR is the same as a consumer fee | They are different arrangements. |
| The Bill guarantees UPI can never be charged | The Bill creates a legal framework for future government action; it does not provide an absolute permanent guarantee. |
Frequently Asked Questions
Did the Bill impose UPI charges?
No. The Bill changes the legal framework governing specified electronic payment modes but does not itself set a UPI charge, MDR percentage, threshold or start date.
Will small merchants pay MDR?
The Payments Council of India has said small merchants, including kirana stores, will continue to accept UPI without paying MDR.
What is MDR?
Merchant Discount Rate (MDR) is a merchant-side payment processing charge. It is different from a transaction fee directly deducted from the consumer.
Will Paytm users be charged?
No user-side UPI charge has been notified under the current developments. The Lok Sabha-passed Bill itself does not specify a consumer transaction fee.
Will PhonePe users have to pay a transaction fee?
No. PhonePe CEO Sameer Nigam stated on 8 August that consumers would not be charged for making UPI payments.
Will Google Pay users be charged for UPI?
No consumer UPI fee has been announced. PhonePe CEO Sameer Nigam has also said consumers will not be charged for making UPI payments.
Conclusion: UPI Is Still Free for Consumers
As of 8 August 2026, there is no newly imposed UPI transaction fee for consumers.
PhonePe CEO Sameer Nigam has publicly assured users that UPI will remain free for Indian consumers, while the Payments Council of India has said consumers and small merchants will remain free of UPI transaction charges.
At the same time, readers should distinguish these industry assurances from the actual legislative position.
The Taxation and Other Laws (Amendment) Bill, 2026, as passed by the Lok Sabha, changes the legal framework around electronic payment modes. It does not itself specify an MDR rate, consumer fee, transaction threshold, merchant-turnover threshold or implementation date.
Therefore, the correct takeaway is:
Google Pay, PhonePe and Paytm users do not have to pay a new UPI transaction fee based on the developments announced as of 8 August 2026.
Any future MDR framework or other payment charge must be evaluated on the basis of the final law and subsequent official notifications, rather than unconfirmed figures circulating online.
Sources & Further Reading
- Taxation and Other Laws (Amendment) Bill, 2026 — legislative text and parliamentary records.
- PhonePe CEO Sameer Nigam’s 8 August 2026 statement on UPI remaining free for consumers.
- Payments Council of India clarification that consumers and small merchants will remain free from UPI transaction charges.
- Finance Minister’s earlier statements concerning the distinction between merchant-side MDR and end-user charges.
- Official parliamentary records for the Bill’s latest legislative status.
Accuracy note: This article is based on the position available on 8 August 2026. The Rajya Sabha status, presidential assent, Gazette publication and any subsequent notification should be checked again before treating a future charging framework as final.
