The government has prohibited banks and payment system providers from levying any charges on UPI transactions up to ₹2,000 and payments made via RuPay debit cards. This directive was issued in a gazette notification on September 14. According to the notification, banks or payment system providers will not be able to levy any charges—directly or indirectly—on the person making or receiving the payment.
This decision follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007. The amendment establishes a legal framework for levying the Merchant Discount Rate (MDR) on UPI and other notified electronic payment modes.
This amendment bill was passed during the Monsoon Session of Parliament. The session concluded on August 13, 2026. Subsequently, the government stated that the UPI and Services Steering Committee chaired by the National Payments Corporation of India (NPCI) would decide on the MDR rates.
While highlighting the need for charges on UPI, the government stated that the rapid rise in transactions necessitates continuous investment in cybersecurity, fraud prevention, and the strengthening of payment infrastructure. According to the government, a sustainable revenue model is essential for the next phase of the digital payment system’s expansion.
Through UPI, operated by NPCI, people can send money to each other in real-time and make direct payments to shopkeepers and businesses. The usage of UPI has grown rapidly since its launch in 2016.
According to available data, the transaction value of UPI rose from ₹0.07 lakh crore in FY17 to approximately ₹314 lakh crore in FY26—an increase of more than 4,000 times over a decade.
UPI is now accepted in 11 countries, including Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, Greece, and Uzbekistan.
