The Indian government has officially implemented rules ensuring no charges on UPI transactions up to ₹2,000 and RuPay debit card payments, aiming to foster continued growth in the country’s rapidly expanding digital payments landscape while addressing funding concerns.
India has formalised rules preventing charges on small digital payments, with the Finance Ministry saying UPI transactions up to ₹2,000 and payments made using RuPay-powered debit cards cannot attract direct or indirect fees from banks or payment system providers. The notification, issued on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007, is intended to settle months of debate over whether the country’s fastest-growing payments network needs a clearer funding model.
According to the government’s notification, the no-charge rule covers both the person making a payment and the person receiving it. That means routine UPI use, from small retail purchases to transfers to friends, remains protected from bank-led charges. The ministry’s clarification also extends to RuPay debit cards, although unlike UPI payments the notice does not attach a ₹2,000 ceiling to those card transactions.
The move comes against the backdrop of a payments system that has scaled rapidly while operating largely without merchant discount rate, or MDR, charges on UPI since 2020. MDR is the fee typically paid within the payments ecosystem to process a merchant transaction. Government data cited in recent reporting suggests only about 4% of person-to-merchant UPI transactions in 2025-26 were above ₹2,000, but those higher-value payments accounted for roughly two-thirds of total merchant-payment value, making them the most likely place for any future charge to be introduced.
State broadcaster Newsonair reported that the finance ministry has also said person-to-person UPI payments will remain free regardless of value, while any future MDR would apply only to selected merchant transactions above a threshold and at a nominal rate. It also said UPI app providers would be barred from adding platform fees or hidden charges, and merchants should not pass MDR costs on to customers. The government has not yet announced the final framework, leaving open the question of how larger merchant payments will be treated if a new fee structure is eventually introduced.
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