UPI Transaction Growth Slows Amid New Fee Debate

The National Payments Corporation of India reported that Unified Payments Interface (UPI) transaction growth slowed to 23.5% during the first four months of FY27. Between April and July, the platform recorded 92 billion transactions, a decrease from the 33.5% growth rate seen during the same period in FY26. While volume growth moderated, transaction value growth increased slightly to 20%.

This deceleration occurs as the industry debates the introduction of a Merchant Discount Rate (MDR) to provide revenue for banks and fintech firms, which have operated under a zero-MDR policy since 2020. The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on August 6, potentially providing the legal framework to implement these charges.

On August 8, the Ministry of Finance clarified that standard bank-to-bank UPI transfers between individuals will remain free for personal use. The ministry stated that any future MDR charges will apply only to a limited set of high-value business transactions above a specific threshold, noting these fees will be nominal and lower than those for debit or credit cards. The government intends these changes to improve cybersecurity, prevent fraud, and ensure the long-term sustainability of the ecosystem. As of July 2026, the system is operational in 11 countries and has processed 2,366 crore transactions worth Rs 29.9 lakh crore.