UPI Charges: No Fees on Payments Up to Rs 2,000, Says Government

The government has barred banks and payment system providers from directly or indirectly charging users for UPI transactions of up to Rs 2,000 and payments made through RuPay-powered debit cards.

A Finance Ministry notification has formally identified these electronic payment modes as protected from charges. The decision follows Parliament’s passage of the Taxation and Other Laws (Amendment) Bill, 2026, in August, which changed the legal framework governing charges on specified digital payment methods.

The amendment had raised concerns that UPI could eventually lose its zero-charge model. The government, however, clarified that the provision only created a mechanism to specify which payment modes would remain protected and that consumers would not be charged for UPI payments.

The latest notification establishes Rs 2,000 as the threshold for UPI transactions covered by the statutory protection. This does not mean that users will automatically be charged for payments above that amount. Instead, it leaves room for a separate Merchant Discount Rate framework for certain higher-value merchant transactions.

Under a possible MDR system, the fee would be charged to merchants by banks or payment service providers for processing digital payments rather than directly to consumers. The government has also indicated that person-to-person UPI transfers would remain free.

UPI is operated by the National Payments Corporation of India and has continued to see rapid growth. In August, the platform processed 24.51 billion transactions worth Rs 29.82 trillion. Google Pay and PhonePe together accounted for around three-fourths of the monthly transaction volume.

The notification also ensures that payments made using RuPay-powered debit cards remain protected from charges.