Banks Cannot Impose Charges on UPI Payments of up to Rs 2,000, Govt Says
The government said consumers will keep using UPI free, while a 0.4% merchant fee applies only to payments above Rs 2,000.
- On Monday, the Ministry of Finance notified that RuPay debit card and UPI transactions up to Rs 2,000 are "electronic modes of payment," prohibiting banks and system providers from imposing direct or indirect charges on these transactions.
- Parliament passed the 2026 Taxation and Other Laws Amendment Bill during the Monsoon Session in August, creating a legal framework authorizing Merchant Discount Rate charges to support long-term sustainability of India's digital payments infrastructure.
- Beginning October 15, a 0.4% MDR applies to person-to-merchant transactions exceeding Rs 2,000, capped at Rs 300; however, 95% of P2M transaction volume falls below this threshold, protecting most daily retail activity from new fees.
- Congress leader Rahul Gandhi alleged the government "quietly paved the way" for future fees, while Finance Minister Nirmala Sitharaman clarified that MDR is a merchant-side ecosystem charge and consumers will not face direct costs on UPI payments.
- A 22-member committee will soon finalize MDR implementation details, with 5% of collections funding a dedicated infrastructure and merchant-onboarding program to ensure UPI remains competitive and sustainable in India's growing digital economy.
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110 Articles
Zero charges on person-to-person transactions: New UPI rules keep all P2P payments 100% free regardless of amount
NEW DELHI: In a major policy announcement aimed at safeguarding everyday digital transactions, the government has clarified that all Person-to-Person (P2P) UPI transfers will remain entirely free of charges, without any restrictions on payment amounts, according to the Ministry of Finance press release. Under a newly structured framework introduced under the Payment and Settlement Systems Act, 2007, approximately 96 per cent of Person-to-Merchan…
Centre introduces 0.4% MDR on UPI payments above ₹2,000 made to merchants
From October 15, a 0.4% merchant discount rate applies to UPI person-to-merchant payments over 2,000, with consumers unaffected; person-to-person.UPI charges, merchant discount rate, UPI payment changes, new UPI fees, digital payment updates, person-to-merchant payments, finance ministry UPI, NPCI transaction fees, UPI infrastructure investment, digital investing costs, essential sector payments, utility bill payments UPI, educational fee paymen…
UPI transactions above Rs 2,000 to attract 0.4% MDR, capped at Rs 300
UPI transactions above Rs 2,000 will attract a Merchant Discount Rate (MDR) of 0.4 per cent under a revised framework introduced by the National Payments Corporation of India (NPCI), while consumers will continue to transact free of cost using UPI.
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