UPI payments up to Rs 2,000, RuPay debit card transactions to remain free

The government has barred banks and payment system providers from charging users for Unified Payments Interface (UPI) transactions of up to Rs 2,000 and payments made through RuPay debit cards.

The decision was notified through a gazette notification dated September 14, which states that banks and payment system providers cannot impose any direct or indirect charge on a person making or receiving a RuPay debit card payment or a UPI transaction of up to Rs 2,000.

However, the notification does not clarify whether charges will be introduced for UPI transactions above Rs 2,000, particularly those made by merchants. UPI transactions have so far remained free of charges regardless of their value.

The move follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007. The amendment creates a framework for imposing a Merchant Discount Rate (MDR) on UPI and other notified electronic payment methods.

Parliament passed the amendment Bill during the Monsoon Session, which ended on August 13, 2026. After its passage, the government said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would determine the applicable MDR rates.

The government has argued that a revenue model is needed as UPI transactions continue to grow rapidly. According to its statement, the payments ecosystem requires sustained investment in cybersecurity, fraud prevention and infrastructure upgrades.

It also said a self-sustaining revenue model would help bring more companies into the sector and increase competition. The government maintained that continued reliance on subsidies would not be viable for the next phase of UPI's expansion and that a balanced system was needed to keep the platform robust and inclusive.

UPI, operated by NPCI, enables instant bank-to-bank payments and allows consumers to pay merchants directly. NPCI is an initiative of the Reserve Bank of India and the Indian Banks' Association.

The payment platform has also expanded beyond India and is now accepted in 11 countries. Uzbekistan is the latest addition, joining Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia and Greece.

Launched on August 25, 2016, UPI has become a major part of India's digital payments ecosystem. Its transaction value rose from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26 — an increase of more than 4,000 times in a decade.