The Ministry of Finance has clarified that banks and system providers cannot levy charges on UPI transactions of up to Rs 2,000 or on payments made using RuPay debit cards.
The ministry has notified the changes in the Payment and Settlement Systems Act, 2007 (51 of 2007). The provision bars banks and system providers from imposing charges, either directly or indirectly, on individuals making or receiving payments through UPI transactions up to Rs 2,000 and RuPay-powered debit cards.
UPI charges: What the government notification says
The notification covers both sides of a transaction, meaning charges cannot be imposed on a person making or receiving a qualifying UPI payment. The restriction also applies to payments made using RuPay debit cards.
The move comes amid discussions around the long-term sustainability of India’s digital payments ecosystem. UPI has expanded rapidly across retail payments, while the government has continued to examine ways to support the infrastructure and participants handling the growing transaction volumes.
In August, the government had indicated that it could allow a nominal Merchant Discount Rate (MDR) on a limited category of UPI merchant transactions above a specified threshold. At the same time, it said consumer transactions and person-to-person payments would continue to remain free.
Government rejects claims over proposed UPI MDR
The government had said the proposed changes were part of a broader effort to make India’s digital payments infrastructure sustainable and competitive while ensuring it can support the country’s expanding digital economy.
The Ministry of Finance had also dismissed reports claiming that external influences were responsible for the proposed policy changes. It described such claims as “unfounded, completely false and misleading.”
The latest notification therefore retains the existing protection against charges for UPI transactions up to Rs 2,000 and RuPay debit card payments, even as the government explores possible changes to the MDR framework for certain higher-value merchant transactions.