UPI Charges: No Fees on Transactions up to INR 2,000, RuPay Debit Cards, Says Government
Banks and payment system providers cannot charge customers for UPI transactions up to INR 2,000 or RuPay debit card payments, the Finance Ministry notified Monday. The gazette order, issued under Section 10A of the Payment and Settlement Systems Act, keeps small UPI payments and RuPay usage free despite recent amendments allowing fees on other modes.
The central government has ruled out any charges on small UPI transactions and RuPay debit card payments, notifying on Monday that banks and payment system providers cannot impose fees on Unified Payments Interface (UPI) transactions up to INR 2,000 or on payments made through RuPay debit cards. The move comes via a gazette notification issued under the Payment and Settlement Systems Act, 2007, just a month after Parliament cleared amendments to the same Act that had opened the door for banks to start levying charges on such transactions.
What The Notification Says
Citing powers under Section 10A of the Payment and Settlement Systems Act, 2007, the Finance Ministry specified two categories as protected electronic modes of payment: debit cards powered by RuPay, and UPI transactions up to INR 2,000. The notification stated that 'no bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment' through these modes, reports said.
This effectively locks in a zero-Merchant Discount Rate (MDR) framework for small-ticket UPI payments and RuPay debit card transactions, even though the recent legal amendment technically gave the government room to allow charges on select payment modes going forward. New UPI Capabilities Unveiled in Mumbai: Understanding 'Tap & Pay' and AI-Powered MyUPI.
Why This Matters
The amendment to the 2007 Act had raised concerns that banks might soon be permitted to charge customers or merchants for UPI and RuPay transactions, a shift from the zero-MDR policy that has largely fueled UPI's mass adoption across India. Monday's notification clarifies that, for now, the government intends to keep low-value UPI payments and RuPay debit card usage free of charge, while retaining the legal flexibility to decide via future notifications which other payment modes might attract fees. How To Register and Use PhonePe UPI 123Pay: Step-by-Step Guide for Feature Phone Users.
UPI's Scale, In Numbers
UPI, run by the National Payments Corporation of India, remains the world's largest retail fast-payment system by transaction volume, according to a 2025 IMF report. The platform processed 24.51 billion transactions worth INR 29.82 trillion in August alone.
The system's footprint now extends beyond India, live in 11 countries including Singapore, the UAE, France, and Nepal. A notable cross-border milestone came in 2023, when UPI was linked with Singapore's PayNow, allowing users in both countries to transfer funds instantly using just a mobile number or Virtual Payment Address.
(The above story first appeared on LatestLY on Sep 15, 2026 08:44 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
