Sustained investment needed to run UPI reliably: Payments Council of India | Finance News
The Payments Council of India (PCI) has backed a potential merchant discount rate (MDR) for the Unified Payments Interface (UPI), adding that sustained investment is necessary to run the real-time payments system reliably.
PCI is an association of digital payments companies in India. It said small merchants would not have to pay an MDR to accept UPI payments, and consumers would continue to use the system free of charge.
“As the ecosystem continues to expand, discussions are taking place on how to sustainably support the infrastructure that enables billions of secure transactions every month, while continuing to ensure that consumers and small merchants remain protected,” PCI said in a post on X.
PCI further clarified that customers would not have to pay any charges for transactions made at large merchants.
It explained that merchant service charges, wherever applicable, were commercial arrangements between merchants and payment service providers, calling them a standard feature of the digital payments ecosystem globally.
UPI was launched in 2016. Since then, ecosystem participants, including banks, fintechs, the National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI), have invested in technology, cybersecurity, fraud prevention, innovation and customer support to build one of the safest and most reliable payment systems in the world, it added.
“Operating a national payment infrastructure involves continuous investment in technology, fraud prevention, cybersecurity, compliance, customer support and innovation. These costs are currently borne by ecosystem participants including banks and payment service providers who continue to invest so consumers can enjoy a safe, secure and seamless payment experience,” the association said.
In July, UPI clocked 23.65 billion transactions worth ₹29.87 trillion, up from 20 billion transactions valued at ₹24.85 trillion in July 2025.
The Taxation and Other Laws (Amendment) Bill, 2026, was passed by the Lok Sabha on Thursday.
The Bill amends the Payment and Settlement Systems Act, 2007, allowing the government to decide which digital payment methods remain free and which can attract charges. It replaces the current mechanism linked to the Income Tax Act, 2025, potentially paving the way for an MDR on transactions made using UPI.
However, an MDR on UPI is unlikely in the near term.
Reserve Bank of India Governor Sanjay Malhotra said on Wednesday that discussions on the structure of a potential MDR for UPI were still premature, adding that continued investment was needed to strengthen the real-time payments system further.
