No charges on small UPI transactions
The government has directed banks and payment system providers not to levy charges on Unified Payments Interface (UPI) transactions of up to ₹2,000 or on payments made through RuPay debit cards. However, the government has not specified whether charges would be applicable to transactions above ₹2,000, to be paid by merchants.
As per a gazette notification dated September 14, no bank or system provider would impose, whether directly or indirectly, any charge on a person making or receiving a payment through RuPay debit card or UPI transaction of up to ₹2,000.
The notification follows an amendment to section 10 A of the Payment and Settlement Systems Act, 2007, which provides an enabling framework for imposing a Merchant Discount Rate (MDR) on payments through UPI and other notified electronic payment modes. The amendment Bill was passed by Parliament during the Monsoon Session, which concluded on August 13, 2026.
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According to the government, with exponential transaction volumes, the system requires significant and continuous upgrades in cybersecurity, fraud prevention, and infrastructure. They say charges are required for market expansion and self-sustainability, adding that a balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready.
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association. It runs real-time payments between individuals and enables customers to make payments directly to merchants while making purchases. UPI is now accepted in 11 countries, including Singapore, the United Arab Emirates, and France.
UPI, launched on August 25, 2016, has changed the way India makes digital payments, with transaction value surging from ₹0.07 lakh crore in FY17 to around ₹314 lakh crore in FY26, a more than 4,000-fold increase over the decade. The government’s decision to not levy charges on UPI transactions up to ₹2,000 is expected to continue promoting the use of digital payments in the country.
