The government has clarified the new rules for UPI payments, bringing relief to millions of users. Under the new framework, UPI transactions of up to ₹2,000 will remain free, with banks and payment service providers not allowed to charge fees on these transactions.
However, the new rules open the possibility of charges on higher-value UPI transactions, especially payments made to merchants. This does not mean that users will immediately have to pay a fee whenever they make a UPI payment above ₹2,000. The government has not announced any automatic consumer charge for transactions such as ₹5,000 or ₹10,000.
The key change is that the earlier blanket protection against charges has been modified. This could allow the payment industry to introduce a Merchant Discount Rate (MDR) for certain large-value merchant transactions in the future. The exact rate and the transactions that may attract the charge are yet to be finalised.
For ordinary users, small UPI payments will continue to remain free. The move is also aimed at protecting low-value digital payments while creating a possible revenue model for banks and payment companies handling larger transactions.
