PhonePe, Razorpay Back UPI Charges for Big Merchants

Indian fintech leaders PhonePe and Razorpay advocate for implementing selective charges on larger businesses utilizing the Unified Payments Interface (UPI). This proposal ensures the popular digital payment service remains entirely free for consumers.

This stance aligns with the Payments Council of India’s (PCI) call for a sustainable UPI operational model. The proposal distinguishes between daily free transactions and specific charges applied to certain merchant payments.

Proposed UPI Charge Details

• The Indian government is reportedly considering a Merchant Discount Rate (MDR) of 5-7 basis points.
• This MDR would apply to businesses with an annual turnover exceeding ₹1-1.5 crore.
• Peer-to-peer and small merchant transactions are slated to remain free under this framework.

Sameer Nigam of PhonePe and Harshil Mathur from Razorpay underscored the critical need for sustainable economics. They explained this is vital for continuous investment in UPI’s reliability, security, and ongoing innovation.

The Lok Sabha passed a bill on August 8, 2026, which aims to remove legal restrictions on banks and payment companies. This legislation would permit them to charge MDR on designated digital payment modes, though specific rates are still undetermined.

Industry figures, including Pine Labs CEO Amrish Rau, alongside the PCI, expressed support for this strategic move. They believe it is essential for funding technology advancements and bolstering fraud prevention measures.

The collective industry view is that these charges will secure UPI’s future development without affecting small businesses or everyday consumers. This approach seeks to strengthen the payment ecosystem’s core infrastructure.