The Central Government has clarified that banks cannot impose charges on Unified Payments Interface (UPI) transactions of up to ₹2,000. The exemption also covers payments of the same amount made through RuPay-powered debit cards, according to a government notification issued by the Finance Ministry.
The notification, issued under the Payment and Settlement Systems Act, specifies that banks and payment system providers cannot levy direct or indirect charges on individuals making or receiving payments through these modes. The move aims to provide clarity on transaction charges amid concerns over the possibility of additional costs for digital payment users.The government has also clarified that person-to-person (P2P) UPI transactions will remain free, irrespective of the amount transferred. Payments made to merchants up to ₹2,000 will also remain free for consumers, while the vast majority of merchant transactions will continue to be unaffected by the Merchant Discount Rate (MDR) framework.
The revised framework is intended to support the long-term sustainability of India’s digital payment system while protecting consumers and small businesses. The government has maintained that any applicable MDR will be limited to specified merchant transactions and that customers should not be charged extra for making UPI payments.
UPI has become one of India’s most widely used digital payment systems, enabling people to transfer money and make payments instantly through mobile applications. The government’s clarification seeks to reassure users that digital payments will continue to remain convenient and affordable.
