UPI Payments up to ₹2,000 will remain free of direct or indirect charges under a new Finance Ministry notification.
The government has also clarified that banks and system providers cannot impose charges on payments made using RuPay debit cards.
The notification was issued under Section 10A of the Payment and Settlement Systems Act, 2007.
It specifies UPI transactions up to ₹2,000 and RuPay-powered debit cards as electronic payment modes protected from such charges.
UPI Payments Up to ₹2,000 Will Stay Free
The new rule means banks and payment system providers cannot directly or indirectly charge a person making or receiving a qualifying UPI payment of up to ₹2,000.
The same protection applies to payments made using RuPay-powered debit cards.
This provides clarity for consumers and businesses using these digital payment methods for everyday transactions.
What Happens to UPI Payments Above ₹2,000
The notification specifically covers UPI transactions up to ₹2,000, while higher-value merchant payments are being treated separately under the emerging UPI merchant fee framework.
From October 15, 2026, a Merchant Discount Rate of up to 0.4% is set to apply to eligible person-to-merchant UPI transactions above ₹2,000.
The charge is a merchant-side fee rather than a direct UPI transaction fee for consumers.
Person-to-person UPI transfers remain outside this merchant-fee framework. This means sending money to another individual is not the same as making a qualifying payment to a merchant.
Why the New UPI Rule Matters
UPI has become a major part of India’s everyday digital payment system, covering transactions ranging from small purchases to larger merchant payments.
The government’s clarification protects small-value UPI transactions from direct and indirect charges while allowing a separate framework for merchant transactions above the ₹2,000 threshold.
For consumers, the key point is that qualifying UPI payments of up to ₹2,000 and RuPay debit card payments cannot be subjected to charges by banks or system providers under the notified provision.
What UPI Users Should Know
Users do not need to change the way they make regular small-value UPI payments because of this notification.
However, for larger merchant transactions, users should understand that the new MDR framework applies to merchants and has different rules depending on the transaction category.
The government has also maintained that consumers will not be charged a separate fee simply for using UPI under the new framework.
