Government Bars UPI and RuPay Fees on Payments Up to Rs 2,000
The Finance Ministry has prohibited banks and system providers from charging fees on UPI transactions of up to Rs 2,000 and RuPay debit card payments. The move follows amendments to payment laws that had raised concerns over the possible introduction of Merchant Discount Rates on digital payments.
The government has formally barred banks and payment system providers from charging fees on UPI transactions of up to Rs 2,000 and on RuPay debit card payments, providing clarity after recent changes to payment laws triggered concerns over a possible return of transaction charges.
The Ministry of Finance notified the decision on Monday, stating that no bank or system provider can impose a charge, directly or indirectly, on a person making or receiving payments through the specified electronic modes.
The notification specifically covers RuPay debit cards and UPI transactions of up to Rs 2,000.
Small-value UPI payments to remain free
The move is particularly significant for India's large base of small digital transactions. During 2025-26, only about 4% of person-to-merchant (P2M) UPI transactions were above Rs 2,000. However, these higher-value transactions accounted for roughly two-thirds of the total value of P2M UPI payments.
Overall, India recorded more than 24,000 crore UPI transactions worth Rs 314 lakh crore in 2025-26.
The government had earlier clarified that small-value UPI payments and person-to-person transactions would not be subjected to charges following amendments to the payment framework.
Why UPI charges had become a concern
The clarification follows the passage of the Taxation and Other Laws (Amendment) Bill, 2026, which amended Section 10A of the Payment and Settlement Systems Act, 2007.
The amendment removed the earlier exemption from bank charges linked to electronic payment modes under Section 269SU of the Income-tax Act, 1961. The provision applies to businesses with annual turnover of more than Rs 50 crore.
The change created a possibility of Merchant Discount Rate, or MDR, charges being introduced on UPI and RuPay debit card transactions involving large merchants.
UPI, BHIM-UPI and UPI QR code payments had previously been covered by provisions preventing banks and system providers from imposing such charges.
Dany is a business journalist with Annuity Outlook Magazine, with over 16 years of experience across print, digital, and wires. He covers business, technology, policy, and corporate developments, with a focus on in-depth reporting and analysis. Over the years, he has worked across multiple editorial platforms. Skilled in content creation, editing, proofreading, and overseeing print layouts, his career spans multiple editorial platforms.
