UPI Charges: No Fee Up to Rs 2,000, MDR on Higher Payments Unclear
The government has directed banks and payment system providers not to levy any charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 or on payments made through RuPay debit cards.
However, the government has not yet clarified whether charges will be imposed on UPI transactions above Rs 2,000, which would be payable by merchants. So far, UPI transactions have remained free of charges, irrespective of the transaction value.
According to a gazette notification dated September 14, no bank or payment system provider can impose, either directly or indirectly, any charge on a person making or receiving a payment through a RuPay debit card or a UPI transaction of up to Rs 2,000.
The notification follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007. The amendment provides an enabling framework for imposing a Merchant Discount Rate (MDR) on payments made through UPI and other notified electronic payment modes.
The amendment Bill was passed by Parliament during the Monsoon Session, which concluded on August 13, 2026. After the Bill was passed, the government said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would decide the MDR rates.
Explaining the rationale for introducing charges, the government said that the exponential growth in transaction volumes requires significant and continuous investments in cybersecurity, fraud prevention and infrastructure.
It had said that charges were required to support market expansion and self-sustainability. It also said that increasing competition by encouraging more companies to expand their operations requires a self-sustaining revenue model.
"Reliance on subsidies alone is not viable for the next wave of growth," the government said, adding that a balanced framework is needed to ensure that UPI remains robust, inclusive and future-ready.
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association.
The platform enables real-time payments between individuals and allows customers to make direct payments to merchants while making purchases. UPI has also expanded its presence overseas and is now accepted in 11 countries, with Uzbekistan being the latest addition.
The other countries where UPI is accepted are Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia and Greece.
Launched on August 25, 2016, UPI has transformed India's digital payments landscape. Its transaction value rose from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, marking a more than 4,000-fold increase over the past decade. ALSO READ: Can Iran replace sea trade with land routes?
