UPI to Remain Free for Consumers and Small Merchants, Says PhonePe CEO

Doubts regarding potential charges for Unified Payments Interface (UPI) transactions have been addressed by PhonePe CEO Sameer Nigam, who affirmed that UPI services will continue to be free for both consumers and small merchants. This statement follows a similar clarification from the Payments Council of India (PCI) a day earlier, which also emphasized that small merchants would not incur Merchant Discount Rate (MDR) fees for accepting UPI payments. The reassurances come amid ongoing discussions and concerns within the digital payments ecosystem about the long-term sustainability and monetization models for UPI, a critical digital public infrastructure in India. The PCI had explicitly stated that while the government has been exploring various models to support the UPI infrastructure, the 'free' status for end-users and small businesses remains a priority. UPI has seen exponential growth since its inception, fundamentally transforming India's digital payments landscape. Its no-cost structure has been a key driver of adoption, particularly among micro and small enterprises, and has played a significant role in financial inclusion. The continued absence of MDR for small merchants ensures that a large segment of the retail economy can continue to leverage digital transactions without additional operational costs. For consumers, the zero-fee model removes a significant barrier to entry for digital payments, encouraging widespread usage for daily transactions. While the current stance maintains the status quo, the underlying economic challenge of sustaining and expanding the UPI network remains. The government has previously provided financial incentives to banks and payment service providers for promoting UPI and RuPay debit card transactions, indicating an acknowledgement of the costs involved in maintaining this infrastructure.