Government Bars Charges on UPI Payments Up to ₹2,000

The Centre has formally specified that banks and payment system providers cannot impose direct or indirect charges on UPI transactions of up to ₹2,000, strengthening the legal protection around small-value digital payments. The Finance Ministry’s September 14 notification also lists RuPay-powered debit cards among the electronic payment modes covered by the no-charge provision.

Under the notification, neither the person making a qualifying payment nor the recipient can be charged by a bank or payment system provider. The order was issued under Section 10A of the Payment and Settlement Systems Act, 2007, following amendments passed earlier this year that gave the Centre greater flexibility to specify which electronic payment modes and transaction categories must remain charge-free.

The change is particularly relevant because it arrives amid continued debate over whether merchant discount rates could eventually return for some UPI transactions. The latest notification itself does not introduce an MDR or specify any fee for UPI payments above ₹2,000. It instead explicitly protects UPI transactions up to that threshold under the revised framework.

The government had already clarified in August that consumers would not face UPI transaction charges and that person-to-person transfers would remain free. It said any future MDR, if introduced, would apply only to a limited category of merchant payments above a specified threshold and at a nominal rate.

The distinction matters because UPI has become infrastructure for everyday commerce rather than simply another payment option. In July 2026 alone, the network processed 2,366 crore transactions worth ₹29.9 lakh crore. By explicitly shielding low-value UPI payments, the government is signalling that routine digital transactions should remain frictionless even as it explores how the broader payments ecosystem can fund its long-term infrastructure and growth.