New Delhi: The Central government has barred banks and payment system providers from levying charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 and payments made through RuPay debit cards. The government on Monday (September 14) notified amendments to the Payment and Settlement Systems Act, 2007, specifying that banks cannot impose charges on UPI transactions of up to Rs 2,000.
A gazette notification classified RuPay-powered debit cards and UPI transactions of up to Rs 2,000 as electronic modes of payment.
As per Section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007), the Central Government prohibits banks and system providers from imposing, directly or indirectly, any charges on a person making or receiving payments using debit cards powered by RuPay and UPI transactions up to Rs 2,000, as per the Ministry of Finance.
The Ministry said that no bank or system provider shall impose any direct or indirect charge on a person making or receiving payments through these modes. “No bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment specified in the paragraph above,” the government notification said.
What does the new rule mean?
The rule ensures that UPI transactions of up to Rs 2,000 remain free of charges while also protecting RuPay debit card payments from such fees.
Charges could still be introduced on UPI transactions above Rs 2,000, although a Merchant Discount Rate (MDR) has not yet been implemented for UPI payments.
In August, the government opened the door to introducing a nominal Merchant Discount Rate (MDR) on a limited set of UPI merchant transactions above a certain threshold, while assuring that consumer and person-to-person payments will continue to remain free.
The government had said the amendment should be seen as part of its broader effort to make India’s digital payment infrastructure sustainable, competitive and capable of supporting the country’s expanding digital economy.
UPI transaction volumes hit all-time high in August
Meanwhile, UPI processed a record 24.51 billion transactions worth Rs 29.8 lakh crore in August, according to data released by the National Payments Corporation of India (NPCI).
The UPI transactions in value terms were Rs 29.8 lakh crore, near a record high of Rs 29.9 lakh crore in May and July 2026. As per the data, UPI transactions in volume terms touched a record of 24.51 billion in August, much higher than 23.66 billion in the previous month. The volume was 22.72 billion in June and 23.2 billion in May of this year.
The value of transactions was Rs 29.82 lakh crore in August, up from Rs 24.85 lakh crore in the same month a year ago, registering 20 per cent annual growth.
At the same time, UPI volume rose by 22 per cent on an annual basis to 24.51 billion in August as against 19.63 billion in the same month last year, according to NPCI data.
NPCI, an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association, is an umbrella organisation for operating retail payments and settlement systems in India (IBA).
