The government has clarified confusion surrounding possible charges on UPI payments above ₹2,000, assuring users that they will not suddenly have to pay a transaction fee for making larger digital payments.
The confusion follows a recent change to the payment regulations that specifically protects UPI transactions up to ₹2,000 from charges. However, the notification does not mean that users will now be charged for every UPI payment above that amount.
What the New Rule Says
Under the government’s September 14 notification, banks and payment system providers cannot impose direct or indirect charges on UPI transactions up to ₹2,000. Payments made through RuPay-powered debit cards are also protected from such charges.
The notification was issued under the amended Payment and Settlement Systems Act, 2007, and has triggered concerns that UPI payments above ₹2,000 could become chargeable.
Will You Pay for a ₹2,000 UPI Payment?
Not at present. The government has not introduced a charge on consumers for making UPI payments above ₹2,000.
The distinction is important because the ongoing discussion concerns Merchant Discount Rate (MDR), which is a fee paid by merchants to banks and payment service providers for processing certain digital transactions. It is not automatically a fee charged to the person making the payment.
The government has repeatedly said that consumers will continue to use UPI without transaction charges, including for higher-value payments.
What Could Change in the Future?
The regulatory amendment creates the possibility of introducing MDR for a limited category of merchant transactions above a specified threshold.
A high-level committee involving banks and payment industry representatives is expected to examine the issue and determine whether charges should be introduced for higher-value merchant payments.
Any such framework would primarily concern the economics of transactions between customers and businesses, rather than person-to-person transfers.
Why Is the Government Considering MDR?
UPI has grown enormously, increasing the cost of maintaining payment infrastructure, cybersecurity, fraud prevention and technological systems. The government has argued that the ecosystem needs a more sustainabl
