The government has notified that UPI transactions up to ₹2,000 and RuPay debit card payments cannot attract direct or indirect charges. Any future MDR would apply to selected merchants, while consumer and P2P UPI payments are expected to remain free.
The Centre has formally notified that banks and payment system providers cannot charge direct or indirect charges on UPI transactions of up to ₹2,000 or on payments made using RuPay debit cards.
The Ministry of Finance issued the notification on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007.
According to the notification, no bank or payment system provider can charge a person making or receiving a payment through the specified electronic payment modes.
The latest notification ensures UPI payments of up to ₹2,000 remain free for users. It also covers transactions made using RuPay debit cards, providing a clear regulatory framework against charges on these payments.
The move comes amid discussions around the long-term sustainability of India's digital payments ecosystem and the possibility of introducing a Merchant Discount Rate (MDR) on certain UPI transactions.
The government indicated in August that consumer payments and person-to-person (P2P) UPI transactions would remain free.
If MDR is introduced in the future, the charge would apply to merchants or the payment ecosystem, not directly to consumers.
Reports have suggested a possible MDR in the range of 0.25% to 0.4% for selected merchant transactions above a specified threshold. However, the latest government notification has not announced an MDR rate.
This means that even if a future MDR is introduced, a customer making a ₹5,000 UPI payment would not automatically have an additional fee deducted from their bank account.
The Finance Ministry also rejected reports suggesting that external forces influenced the proposed changes to UPI payments. The government described such claims as unfounded, completely false and misleading.
Officials said any changes under consideration are part of a broader effort to ensure India's digital payments infrastructure remains sustainable, competitive, and capable of supporting the country's rapidly expanding digital economy.
UPI has continued to grow significantly since its launch around a decade ago. In August, the platform processed 24.51 billion transactions worth ₹29.82 trillion.
Google Pay and Walmart-owned PhonePe together accounted for around three-fourths of the total UPI transaction volume during the month.
For now, the latest notification confirms that UPI transactions up to ₹2,000 and RuPay debit card payments will remain free, while any future MDR framework for selected merchant transactions is yet to be officially notified.
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