Noida, Sep 15 (APAC Media): The government has barred banks and payment system providers from levying charges on UPI transactions of up to ₹2,000, ensuring that small-value digital payments remain free for users.
The move follows changes to the Payment and Settlement Systems Act, 2007, notified by the Finance Ministry on Monday.
Under the notification, UPI transactions up to ₹2,000 and payments made through RuPay-powered debit cards have been specified as electronic modes of payment covered by the provision.
The government said banks and payment system providers cannot impose charges on either the person making or receiving such payments.
“No bank or system provider shall impose, whether directly or indirectly, any charge” on a person making or receiving payments through the specified electronic modes, the notification said.
The decision assumes significance at a time when UPI has become the preferred payment method for millions of Indians, particularly for low-value transactions at shops, restaurants, local businesses and online platforms.
The government has been examining the issue of charges in the UPI ecosystem as transaction volumes have grown sharply and banks and payment companies have sought a sustainable way to support the infrastructure behind the system.
However, officials have maintained that consumers should not be required to pay for routine UPI transactions.
The Finance Ministry had earlier said, “UPI will remain free for citizens,” while clarifying that any potential Merchant Discount Rate (MDR) would not amount to a blanket charge on all UPI transactions.
According to the government, any MDR, if introduced, would be restricted to a limited category of merchant transactions above a specified threshold and would be kept at a nominal level.
The ministry had also said such charges would be “significantly lower” than those applicable to traditional debit and credit card payments.
The latest notification does not, however, introduce a charge on UPI transactions above ₹2,000. Instead, it provides the legal framework for regulating charges, leaving the details of any possible fee on higher-value merchant transactions to a separate decision.
For ordinary users, the immediate impact is limited but significant. Small UPI payments, which account for a large part of everyday digital transactions, will continue without bank or system-provider charges.
The government is seeking to balance two objectives — keeping digital payments affordable for consumers while ensuring that the UPI ecosystem has enough resources to invest in technology, security and infrastructure.
UPI payments up to ₹2,000 will continue to be free, with no direct or indirect charges from banks or payment system providers.
–ENDS–
Disclaimer: This article is for informational purposes only and is based on publicly available information. APAC Media is not responsible for investment decisions or losses. Please conduct your own research or consult a financial adviser before investing.
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