UPI Has Stayed Free Because a Law Said So — That Law Just Changed

New Delhi: UPI has stayed free because a specific law named it as protected, in black and white. Parliament just removed that fixed rule. Now the government can decide, by a simple notification, which payment modes stay free. A guarantee just became a choice.

That change sits inside the Taxation and Other Laws (Amendment) Bill, 2026, passed by the Lok Sabha on Thursday, and it turns on a single substitution in Section 10A of the Payment and Settlement Systems Act, 2007. Until now, the provision that stopped banks and payment companies from charging a Merchant Discount Rate on UPI and RuPay debit transactions was anchored to a fixed reference, Section 269SU of the Income-tax Act, which names the specific electronic payment modes covered. That anchor is gone. In its place, the law now reads that protection extends to "one or more electronic modes of payment as the Central Government may, by notification, specify." Parliament wrote the rule once, in 2020, and it held for six years without needing to be revisited. From now on, the same protection can be granted, narrowed, or withdrawn by executive notification, without another vote in either House.

Nothing changes for users today. The Bill imposes no fee, and by most reporting so far, any charge that does eventually get notified is expected to apply only to high-value merchant transactions  not the small, everyday UPI payments most people make. Analysis cited in recent coverage suggests transactions above ₹2,000 make up a small share of UPI's total transaction volume but a large share of its transaction value, which is the kind of distinction that would let a future notification target where the money actually moves without touching how most people use UPI day to day. The RBI Governor has called talk of an actual charge "premature," while also making the underlying point directly: someone always pays for this infrastructure, even if it isn't the person tapping their phone at checkout.

What the amendment removes isn't a fee, it's a form of accountability. A statutory guarantee, once altered, has to go back through Parliament: debate, votes, public record. A notification doesn't. It can be issued, amended, or reversed by the executive alone, with far less friction and far less visibility. That difference is the actual story here not whether UPI becomes chargeable tomorrow, but who now holds the pen on that decision, and how much scrutiny it will face when it's finally used.