Govt notifies zero charges on UPI up to Rs 2,000; 96% transactions fall in protected band

New Delhi [India], September 15 (ANI): The Finance Ministry has notified that Unified Payments Interface (UPI) transactions of up to Rs 2,000 cannot attract any direct or indirect charge from banks or system providers, effectively keeping around 96 per cent of UPI transactions by volume within the zero-charge threshold.
In a Gazette notification dated September 14, the Department of Financial Services under the Ministry of Finance specified two electronic modes of payment — “Debit Card powered by RuPay” and “Unified Payments Interface (UPI) transactions up to Rs. 2,000.”
Making the prohibition on charges explicit, the notification said, “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 paragraph above.”
The notification was issued by the Central Government “In exercise of the powers conferred by section 10 A of the Payment and Settlement Systems Act, 2007 (51 of 2007)”, under which it specified the electronic modes of payment covered by the provision.
The Rs 2,000 threshold is significant given the composition of UPI payments. According to industry data, around 96 per cent of UPI transactions by volume fall within the Rs 0-Rs 2,000 value band, indicating that the overwhelming majority of transactions would remain within the threshold expressly protected from charges under the notified framework.
In the person-to-merchant (P2M) segment too, industry estimates suggest that only around 4 per cent of transactions are above Rs 2,000, implying that roughly 96 per cent fall within the Rs 2,000 threshold.
The notification, however, does not specify or introduce a Merchant Discount Rate (MDR) for UPI transactions above Rs 2,000. Its operative provision is limited to prohibiting banks and system providers from imposing any direct or indirect charge on UPI transactions of up to Rs 2,000 and on debit-card payments powered by RuPay.
This distinction is significant as the notification states only that UPI transactions “upto Rs. 2,000” are among the specified electronic modes on which no charge can be imposed on a person making or receiving a payment. It does not set out a charging framework for UPI transactions exceeding that amount.
UPI processed more than 24,500 million transactions worth nearly Rs 29.82 lakh crore in August 2026, according to National Payments Corporation of India (NPCI) data, highlighting the scale of the country's digital payments ecosystem. (ANI)