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Sameer Nigam
Sameer Nigam
CEO & Co-Founder, PhonePe
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UPI Payment News Rules: Why is there a tax on UPI? PhonePe CEO explains | Sameer Nigam

📅 Sep 16, 2026 ABP NEWS 10 MIN 14191 VIEWS 15 SEGMENTS · 2 SPEAKERS
UPI Payment News Rules: PhonePe's CEO explained why there is a tax on UPI? | Sameer Nigam #upicharges #upipayments #upitransaction #upipaymentnews #upirules #upinews #upipaymentfees #transactionfees #digitalpayments #onlinepayments #upi #upitransactions Amid the opposition to imposing charges on digital transactions, the government has taken a new decision regarding the Merchant Discount Rate (MDR) on UPI. According to the government, merchants will have to pay a 0.4 percent charge on UPI payments above 2,000 rupees. NPCI said on Tuesday that from October 15, merchants will have to pay a...

What Sameer Nigam said

Written from the verified transcript and checked against it. Every figure links to the moment it was said.

Sameer Nigam, CEO of PhonePe, addressed the new UPI transaction charges effective October 15, explaining that the industry has been subsidizing UPI for six years, incurring annual losses of ₹8,000-12,000 crore, which is unsustainable. He clarified that the MDR (0.4% on transactions above ₹2,000) is the lowest globally and will not burden customers, as merchants already pay higher MDR on credit/debit cards without passing it on. He cited that 96% of transactions are below ₹2,000, so most users are unaffected, and highlighted caps: ₹300 on large transactions and ₹5 for essential sectors like petrol and agriculture. Nigam praised the government, RBI, and NPCI for thoughtful design, assured that peer-to-peer transfers remain free, and encouraged users to transact fearlessly.

Key takeaways

  1. UPI transactions below ₹2,000 will remain free; 96% of transactions fall in this category.
  2. MDR on UPI is capped at 0.4%, the lowest payment network cost globally.
  3. A cap of ₹300 applies to large UPI transactions over ₹75,000.
  4. Essential sectors like petrol, agriculture, and bill payments have MDR capped at ₹5.
  5. Charging customers for UPI MDR is illegal via gazette notification; customers can refuse.

Numbers and commitments

FigureWhat it refers toTypeAt
October 15 Date from which tax will be levied on UPI transactions timeline 0:00
₹2,000 Threshold for UPI MDR applicability timeline 0:00
₹8,000 to 10,000 to 12,000 crore Annual industry losses from UPI subsidization metric 0:41
0.4% UPI MDR rate on transactions above ₹2,000 metric 2:48
96% Share of UPI transactions below ₹2,000 metric 2:48
4% Share of UPI transactions above ₹2,000 metric 3:58
0.65% MDR on debit cards, compared to UPI metric 3:58
₹300 Cap on MDR for large UPI transactions commitment 5:34
₹5 MDR cap for essential sectors like petrol, agriculture, bill payments commitment 5:34
18-20 paise PhonePe's revenue per UPI transaction metric 7:30

Chapters

  1. 0:00Calls for sustainable MDR
  2. 2:48Customer fears dismissed
  3. 5:34Sector-specific MDR caps
  4. 7:30Monetization and market expansion
  5. 8:31Reassurance to viewers

Questions asked in this interview

4
  1. 0:00Is it a challenge or an opportunity that has been given?
  2. 1:59So, what answer would you give to clear this misconception?
  3. 6:49So, 96% of people who transact via UPI will not be affected anyway. How much population is left?
  4. 8:19For those who still have any doubt, fear, or misconception, what would you say to them?
Interviewer 0:00 ↗
The date from which tax will be levied on UPI transactions is October 15th. A charge will be applied on UPI transactions of more than ₹2,000. Currently, there is a lot of confusion in the country regarding UPI. There is a state of misconception. The government claims that this tax will not have to be paid by customers but directly by shopkeepers. So, to clarify this issue further, we have a special guest with us right now. PhonePe's Founder and CEO, Sameer Nigam, is present with us. Sameer ji, welcome to ABP News. Thank you for taking the time. First, I want to know from you, how do you see the decision taken by the government? Is it a challenge or an opportunity that has been given?
Sameer Nigam 0:41 ↗
Hello. Our industry has now been growing UPI in the country for almost 10 years. Everyone knows that about 500 million citizens and about 50 million small shopkeepers and big businesses are all using UPI. It has become the world's largest payment network. But for the last six years, the industry has been subsidizing it. In the beginning, the numbers were low, the figures were low, so government subsidies were coming in. It used to be around 1,000 to 2,000 crore. But for the last three to four years, especially, the volume of UPI has grown so much that the industry was facing a loss of 8,000 to 10,000 to 12,000 crore every year. And this was visible on the balance sheets of all 200 companies here and the rest of the banks. So, how will this sector grow? How will we bring the next 500 million people onto UPI? How will investment happen for that? Some solution was needed for that. And in over 200 countries around the world where digital payments happen, the concept of MDR is the same everywhere: merchants absorb this cost to some extent.
Interviewer 1:59 ↗
Okay. You mentioned the word tax, so I want to say that the government collects tax. The government is not making a single penny from this. This is going to the income of all the industry players who are providing this facility and investing in it. It is going to their revenue. Meaning, the scope of UPI transactions will increase. There will be more stability in these transactions, and in a way, a sustainable revenue model will emerge for the industry, which will increase opportunities for further growth. So, in a way, this is an opportunity. But now my question is, the common person has this fear in their mind: is it possible that this MDR will burden our pockets? So, what answer would you give to clear this misconception?
Sameer Nigam 2:48 ↗
Look, first of all, legally, the government has also banned charging the customer. But I understand that people have this fear about what will happen on the ground. What will happen in the market? If you look at this, in India today, about 6 million merchants already accept credit cards, RuPay, Visa, Mastercard, which are called POS devices. On which merchants are charged an MDR of 1.5 to almost 2.5% sometimes, and that cost is not being transferred to the customer by the merchants. Now, this UPI MDR of 0.4% is the lowest cost of any payment network in the world. And that too is applied on transactions of more than ₹2,000. Okay? Now, let's look at it from the customer's side. First, in India, 96% of transactions are of less than ₹2,000. So, there is no question for 96%. If the merchant has no MDR, what will he charge you?
Interviewer 3:56 ↗
That's right.
Sameer Nigam 3:58 ↗
For the remaining 4% of merchants you are going to, if you are doing a transaction of more than ₹2,000 via UPI, those merchants have been paying MDR on different instruments for many years: on digital wallets, on RuPay, Visa, Mastercard, on both credit and debit cards, by the way. Even today, an MDR of 0.65% is charged on all debit cards, which is almost one and a half times more than UPI. I don't remember in the last 20 years in India that any shopkeeper has told me to give me back 0.65%. I haven't seen it. So, it's fine to say that, but it doesn't happen on the ground. The RuPay network came three years ago. It runs on UPI QR codes. All merchants accept RuPay. Its MDR is almost 2%, ma'am. And RuPay is India's fastest-growing credit card network. Both these things cannot happen together. Either the customer is getting this facility and the merchant is not charging him, or RuPay wouldn't be growing.
Interviewer 5:04 ↗
Right. And sir, in my opinion, this limit that has been set, this cap that has been imposed, that a flat ₹300 will be charged. If any transaction is more than ₹75,000, that is also a very practical decision taken so that, as is being said, UPI payments should not be affected in any way, or people should not move away from digital and go back to cash transactions. That has also been fully taken care of.

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Cite this transcript

APA, MLA, BibTeX
APA

Nigam, S. (2026, September 16). UPI Payment News Rules: Why is there a tax on UPI? PhonePe CEO explains | Sameer Nigam [Interview transcript]. ABP NEWS. CEOInterviews.AI. https://ceointerviews.ai/interview/1352436/

MLA

Sameer Nigam. "UPI Payment News Rules: Why is there a tax on UPI? PhonePe CEO explains | Sameer Nigam." ABP NEWS, 16 Sep. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1352436/.

BibTeX 
@misc{nigam2026_1352436,
  author       = {Sameer Nigam},
  title        = {UPI Payment News Rules: Why is there a tax on UPI? PhonePe CEO explains | Sameer Nigam},
  howpublished = {Interview transcript, ABP NEWS. CEOInterviews.AI},
  year         = {2026},
  month        = {sep},
  url          = {https://ceointerviews.ai/interview/1352436/},
  note         = {Speaker-attributed transcript with timestamps}
}