UPI Payment Rule: No Charges on Transactions Up to ₹2,000
The government has directed banks and payment system providers not to impose any charges on UPI transactions of up to ₹2,000 or payments made through RuPay debit cards. According to a Gazette notification issued on September 14, banks and payment system providers cannot charge a person directly or indirectly for making or receiving a UPI payment of up to ₹2,000 or for transactions made through RuPay debit cards.
What does the new UPI rule mean?
The notification follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007. The amendment creates a framework for imposing Merchant Discount Rate (MDR) on UPI and other notified electronic payment methods. The government has said that the rapid growth in digital payments requires continuous investment in cybersecurity, fraud prevention and payment infrastructure. A sustainable revenue model is also considered important for the future expansion of the digital payments ecosystem.
UPI continues to grow
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India and the Indian Banks’ Association. The payment system enables instant transfers between individuals and allows customers to make direct payments to merchants. UPI is now accepted in 11 countries, including Singapore, the UAE, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, Greece and Uzbekistan. Launched on August 25, 2016, UPI has transformed India's digital payments landscape. Its transaction value rose from ₹0.07 lakh crore in FY17 to around ₹314 lakh crore in FY26, marking more than a 4,000-fold increase over the decade.
