The Central government has clarified that banks and system providers cannot levy direct or indirect charges on UPI transactions of up to Rs 2,000 or payments made using RuPay-powered debit cards.
A government gazette notification has classified RuPay-powered debit cards and UPI transactions of up to Rs 2,000 as “electronic modes of payment”. Under the notification, no bank or system provider can impose charges on a person making or receiving payments through these modes.
The Finance Ministry issued the notification under Section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007), specifically addressing the rules around charges on these digital payment methods.
“In exercise of the powers conferred by section 10 A of the Payment and Settlement Systems Act, 2007 (51 of 2007), the Central Government hereby specifies the following electronic modes of payment, namely:– (i) Debit Card powered by RuPay; and (ii) Unified Payments Interface (UPI) transactions upto Rs. 2,000. 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 Finance Ministry said in the notification.
The clarification comes after the government in August opened the possibility of introducing a nominal Merchant Discount Rate (MDR) on a limited category of UPI merchant transactions above a specified threshold. It had also assured that consumers and person-to-person payments would continue to remain free.
The government said the proposed amendment forms part of a broader effort to make India’s digital payments ecosystem sustainable and competitive while supporting the country’s expanding digital economy.
Finance Minister Nirmala Sitharaman had also said last month that MDR on digital transactions applies to merchants, not customers. She said the charge would help banks and fintech companies invest further in payment infrastructure and security.
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