The government has formally notified that UPI transactions of up to ₹2,000 and payments made through RuPay debit cards cannot attract any direct or indirect charges. The move provides clarity to millions of users and merchants who rely on digital payments for everyday transactions.
The notification was issued by the Ministry of Finance on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007. It specifically identifies RuPay debit cards and UPI transactions up to ₹2,000 as electronic payment modes on which banks and system providers cannot impose charges.
The government has also made it clear that the protection covers both sides of a transaction. Banks and payment system providers cannot directly or indirectly charge either the person making the payment or the person receiving it when the transaction falls within the specified limit.
The decision is important because UPI has become the most widely used digital payment method in India. Consumers routinely use UPI to pay for groceries, food, transport, utility bills and other everyday purchases. Small businesses, street vendors and merchants have also increasingly moved away from cash as UPI payments have become easier and faster.
The new notification, however, has also opened the door to a possible change in the way higher-value UPI transactions are handled. While payments up to ₹2,000 are protected from charges, the government has not said that transactions above this threshold will definitely attract a fee.
This distinction has become the centre of attention for the digital payments industry. The government is considering changes to the Merchant Discount Rate (MDR) framework, which is the fee associated with processing certain digital payments. A decision on whether and how MDR could apply to higher-value UPI merchant transactions is still awaited.
The development therefore does not mean that users will suddenly start paying a fee every time they make a UPI payment above ₹2,000. The notification establishes a protected threshold, but it does not itself announce a new charge on transactions above that level. The government has yet to finalise how such charges, if introduced, would work.
This distinction is important for consumers because much of the discussion around UPI charges has created confusion in recent days. The latest rules ensure that small-value digital payments remain free, while leaving room for a possible new pricing structure for larger merchant transactions.
The issue is closely linked to the cost of maintaining India’s rapidly expanding digital payments infrastructure. Banks, payment service providers, UPI apps and other participants incur expenses while processing transactions and maintaining the technology required to keep the system running around the clock.
At present, the government supports the digital payments ecosystem through incentive schemes. Earlier programmes have provided financial support to banks and other participants to encourage low-value UPI transactions and RuPay debit card usage.
The government has previously used incentives to promote BHIM-UPI and RuPay debit cards, particularly among small merchants. Under an earlier incentive scheme, transactions of up to ₹2,000 involving eligible small merchants received support designed to encourage merchants to accept digital payments without imposing an additional cost on customers.
The scale of UPI makes the question of payment costs increasingly important. In 2025-26, UPI processed more than 24,000 crore transactions, with the total value crossing ₹314 lakh crore, according to figures cited in recent reports. The numbers underline how deeply UPI has become embedded in India’s financial system.
The government’s latest move is also aimed at protecting the accessibility of digital payments. Keeping low-value transactions free is expected to benefit consumers who use UPI for frequent, relatively small payments. It should also help small merchants continue accepting digital payments without worrying about additional costs on everyday purchases.
RuPay debit card payments have received similar protection under the notification. RuPay is India’s domestic card payment network and has been promoted as an alternative to international card networks. The continued exemption is expected to support its use among consumers and merchants.
The larger question now is what happens to UPI payments above ₹2,000. A possible MDR structure could change the economics of merchant payments, particularly for businesses handling larger transactions. The government will have to balance the sustainability of the payment ecosystem with the need to keep digital payments affordable.
The notification also comes at a time when India is pushing deeper into a less-cash economy. UPI has played a major role in bringing digital payments to smaller towns, local shops and individual businesses. Any changes to its pricing structure could therefore have a wider impact on consumers and merchants.
UPI payments up to ₹2,000 remain free, and RuPay debit card payments are also protected from charges. The focus will now shift to the government’s next decision on merchant fees and MDR for larger-value digital transactions.