No charges on UPI payments up to Rs 2,000, government notifies

The central government has given major relief to crores of people who make UPI payments every day. Banks and payment system providers will not be able to charge any fee, directly or indirectly, on UPI transactions up to Rs 2,000 or on any payment made through a RuPay debit card. The finance ministry announced this through an official gazette notification.

The ministry's department of financial services issued the notification on September 14, 2026. Both these modes of payment have been clearly brought under the Payment and Settlement Systems Act, 2007. The notification states that no charge will be levied on any person sending or receiving money through these modes.

The new order clarifies that two electronic payment methods fall under this arrangement: payments made through RuPay debit cards, and all UPI transactions up to Rs 2,000. The government has also made clear that banks and fintech companies cannot charge any fee, in any manner, from customers or merchants using these two methods. This means your everyday UPI payments up to Rs 2,000 will remain completely free.

There had been talk for some time that a merchant discount rate, or MDR, could be applied to UPI transactions. There was debate over the financial burden being placed on banks, fintech companies and the entire payment system because of the rapid growth of digital payments. However, the government has clarified the position on transactions up to Rs 2,000, removing the confusion among the common man and small traders.

One thing needs to be understood here: the new notification gives this special exemption only to UPI transactions up to Rs 2,000. It does not mean that all UPI transactions will remain free forever. The government is already deliberating on imposing MDR on larger business UPI transactions going forward.

The finance ministry took this decision under Section 10A of the Payment and Settlement Systems Act, 2007. Under this legal provision, the central government has full authority to specify certain electronic payment methods and bar any kind of charge from being levied on them.