The government has clarified its position on UPI charges and RuPay debit card payments after recent changes to payment rules triggered concerns among users and businesses. The Ministry of Finance notified on Monday that banks and payment system providers cannot levy charges on UPI transactions of up to Rs 2,000 or RuPay debit card payments covered under the specified electronic payment modes.
No Charges on UPI Payments Up to Rs 2,000
The latest notification makes it clear that users will not be charged for eligible low-value UPI transactions.
“No bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment specified in paragraph above,” the government said.
The notification specifically covered RuPay debit cards and UPI transactions of up to Rs 2,000. This means ordinary users making small UPI payments should not have to pay an additional transaction fee.
What About UPI Payments Above Rs 2,000?
The clarification comes amid a wider debate over the future of Merchant Discount Rate (MDR) on digital payments. Data shows that only around 4% of person-to-merchant (P2M) UPI transactions in 2025-26 were above Rs 2,000. However, these transactions accounted for nearly two-thirds of UPI payments by value.
During 2025-26, over 24,000 crore UPI transactions were recorded, which were worth around Rs 314 lakh crore. This stat shows that high-value transactions, which were lower in number, but represents a significant share of total money moving through UPI.
Why Did the Government Change the Payment Rules?
This development comes after the Taxation and Other Laws (Amendment) Bill 2026, which was passed by the Parliament last month. The legislation amended Section 10A of the Payment and Settlement Systems Act 2007. The previous exemption from the bank charges for certain electronic payments under Section 269SU of the Income-tax Act was removed.
Section 269SU had applied to businesses with a turnover of more than Rs 50 crore. The change raised concerns that MDR could eventually be introduced on UPI and RuPay payments, particularly for large merchants such as Amazon and Flipkart.
Government Says Ordinary UPI Users Will Not Be Hit
The Finance Ministry had already attempted to address concerns surrounding the amendment.
“The recent amendment to the Payment and Settlement Systems Act (PSS Act) has generated debate, with some misinterpreting it as a move to impose charges on ordinary users.”
The ministry had said the amendment was intended to support UPI’s long-term sustainability, technological advancement, and resilience against emerging risks. The latest notification now formally protects low-value UPI transactions up to Rs 2,000 from such charges.
Why Is MDR Being Discussed Again?
Banks and payment service providers have long argued that maintaining digital payment infrastructure comes with rising costs. A Standing Committee on Finance report in March noted that the “absence of MDR makes the UPI ecosystem financially unsustainable”.
MDR is generally a fee charged to merchants for processing digital card payments. It usually ranges between 1% and 3%, depending on the payment method and transaction. There has been no MDR on UPI and RuPay debit card transactions since January 2020. The move was aimed at encouraging digital payments across India.
How Does the Government Support Small UPI Payments?
Instead of MDR, the government has been supporting small merchants through an incentive scheme for RuPay debit cards and low-value BHIM-UPI transactions. The incentive is capped at 0.15% of the transaction value and applies to eligible payments of up to Rs 2,000.
However, large merchants are not covered under the scheme. For now, the government’s latest notification provides clarity for ordinary users: UPI payments up to Rs 2,000 remain protected from charges, while the broader question of how high-value merchant payments will be handled remains important for India’s digital payment ecosystem.
Sudeep Singh Rawat is a Copy Editor at NewsX Digital with over five years of experience in digital journalism. He covers national and international news, with a focus on politics, crime, technology, public affairs, and trending topics. Before joining NewsX Digital, he worked with Business Standard, The Sunday Guardian, and other digital media organisations. His reporting focuses on breaking news, enterprise stories, and explainers that inform readers through accurate, balanced, and context-driven journalism.
