UPI Charges: Govt Says No Bank Can Levy Fee On Transactions Up To Rs 2,000, Check New Rule

The government has clarified that banks and system providers cannot impose direct or indirect charges on UPI transactions of up to Rs 2,000.

The same rule applies to payments of up to Rs 2,000 made through RuPay-powered debit cards.

Source : Freepik

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Key points generated by AI, verified by newsroom

• UPI payments up to Rs 2,000 incur no fee.
• RuPay debit card payments also incur no charges.
• Finance Ministry issued formal notification under Payment Systems Act.

People making or receiving UPI payments of up to Rs 2,000 cannot be charged any fee by banks or system providers, the government has clarified.

The same protection applies to payments of up to Rs 2,000 made through RuPay-powered debit cards. The Finance Ministry issued a gazette notification on Monday, formally specifying the two payment modes under the Payment and Settlement Systems Act, 2007.

The notification means banks and system providers cannot levy charges on either the person making or receiving a payment through these specified modes.

What The New UPI Notification Says

The government has identified two electronic payment modes under the notification:

RuPay-powered debit cards
UPI transactions of up to Rs 2,000

For these transactions, the notification states that no bank or system provider can impose a charge on the payer or recipient.

The restriction covers both direct and indirect charges.

The Finance Ministry issued the notification by exercising powers under Section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007).

UPI Charges: What About Transactions Above Rs 2,000?

The notification specifically covers UPI transactions up to Rs 2,000. Separately, the government had last month addressed concerns about the possibility of charges being introduced for UPI payments.

At the time, the Finance Ministry said consumers would not be charged for making payments through UPI.

The ministry also clarified that person-to-person (P2P) UPI transactions would continue to remain free and that there would be no blanket merchant discount rate (MDR) on merchants.

According to the ministry, if MDR is introduced in the future, it would be restricted to a limited set of merchant transactions above a specified threshold and would be charged at a nominal rate.

Govt Says Any Future MDR Would Be Lower Than Card Charges

The Finance Ministry had also said that any such MDR would be significantly lower than the MDR applicable to debit or credit card transactions.

MDR refers to the charge associated with processing certain digital payments. The government's earlier clarification came amid discussions over changes to the Payment and Settlement Systems Act, 2007.

Those changes had led to concerns about whether UPI users could eventually face transaction charges.

Why The Government Issued The Clarification

The latest notification provides a specific classification for UPI payments up to Rs 2,000 and RuPay-powered debit card transactions under the electronic payment modes covered by the government's direction.

It also explicitly states that charges cannot be imposed on people making or receiving payments through these modes.

The Finance Ministry's latest notification comes against the backdrop of the wider discussion around the payment law and the possibility of charges being introduced for certain digital transactions.