The Union government on Monday said that banks and system providers cannot charge fees on Unified Payments Interface transactions of up to Rs 2,000 and payments made using RuPay debit cards.
The Union Ministry of Finance issued the notification under Section 10A of the Payment and Settlement Systems Act, 2007.
In 2025-’26, transactions exceeding Rs 2,000 accounted for just 4% of person-to-merchant UPI payment, The Indian Express reported. However, these transactions represented nearly two-thirds of the total value of person-to-merchant UPI payments.
Parliament passed the 2026 Taxation and Other Laws Amendment Bill in August, allowing banks and other service providers to levy charges on payments through UPI and RuPay debit cards.
The legislation amended the 2007 Payment and Settlement Systems Act, leading to fears that merchants, who would face a Merchant Discount Rate, would pass off the cost to consumers in the future.
Merchant Discount Rate is a fee charged to businesses by banks to cover the costs of processing transactions. The rate typically ranges from 1% to 3% of the transaction value for credit card payments and can be up to 0.9% for debit card transactions.
However, the finance ministry had later clarified that consumers making UPI payments will not face any transaction charges. “All person-to-person transactions will continue to be free of charge,” it had stated.
It had also said that only a limited set of merchant transactions will attract the Merchant Discount Rate. The charges will apply “above a certain threshold and at a nominal rate”, it added.
Written by Anamika Pathak. Edited by Neerad Pandharipande.