New Delhi: The government has directed banks and payment system providers not to levy charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 or on payments made through RuPay debit cards.
However, the government has not specified whether charges would be applicable to transactions above Rs 2,000, to be paid by merchants. So far, there has been no charge on UPI transactions, irrespective of the amount.
As per a gazette notification dated September 14, no bank or system provider would impose, whether directly or indirectly, any charge on a person making or receiving a payment through RuPay debit card or UPI transaction of up to Rs 2,000.
The notification follows an amendment to section 10 A of the Payment and Settlement Systems Act, 2007, which provides an enabling framework for imposing a Merchant Discount Rate (MDR) on payments through UPI and other notified electronic payment modes.
The amendment Bill was passed by Parliament during the Monsoon Session, which concluded on August 13, 2026. Following the passage of the Bill, the government had said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would decide on the MDR rates.
Explaining the rationale for imposing charges, the government, in a statement, said, with exponential transaction volumes, the system requires significant and continuous upgrades in cybersecurity, fraud prevention, and infrastructure.
Charges were required for market expansion and self sustainability, it had said. It is necessary to increase competition by encouraging more companies to expand their operations, which requires a self-sustaining revenue model, it had said.
Reliance on subsidies alone is not viable for the next wave of growth, it said, adding that a balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready.
Compromised PM Modi surrendering to US: Rahul
Congress leader Rahul Gandhi on Tuesday alleged that the Modi government has quietly paved the way for imposing fees on UPI transactions and that a “compromised” Prime Minister Narendra Modi was “once again surrendering” to American pressure.
The Congress raised questions over the government’s notification on UPI transactions, claiming that the stage is clearly being set for people to pay a fee for such transactions and asking whether this is being done to open digital payments for American firms to “appease” US President Donald Trump.
In a post in Hindi on X, Gandhi alleged that the Modi government has quietly paved the way for imposing fees on UPI.
“Now, MDR can be levied on merchant UPI transactions above Rs 2,000. Even if these transactions account for just 5% of the volume, they make up nearly 65% of UPI’s total transaction value,” Gandhi said.
“The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from? Added to the prices, straight out of the customer’s pocket,” the Leader of Opposition in the Lok Sabha said.
American payment companies have long opposed India’s zero-MDR policy, Gandhi said.
Now, the Modi government has opened the path to changing the policy in exactly that direction, Gandhi claimed.
“Just like with the US Trade Deal, Compromised PM Modi is once again surrendering to American pressure,” the former Congress chief alleged.
The Congress alleged that the government has yet again shown complete lack of honesty and transparency and has broken the trust of users.
The opposition party’s attack came after the government directed banks and payment system providers not to levy charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 or on payments made through RuPay debit cards.
However, the government has not specified whether charges would be applicable to transactions above Rs 2,000, to be paid by merchants. So far, there has been no charge on UPI transactions, irrespective of the amount.
Reacting to it, Congress general secretary in-charge communications Jairam Ramesh said, “Just as we warned on August 6, 2026 to which the Hon’ble FM herself had deemed it fit to respond, the Modi Government is now using new laws bulldozed through Parliament to start the process of charging for UPI.”
“A notification has just been issued under the amended Payment and Settlement Systems Act, 2007 that prohibits banks and providers from charging only for UPI transactions under Rs 2000. But there is NO explicit protection for any transaction above this cap,” Ramesh said on X.
The stage is clearly being set for all of us to pay a fee for UPI transactions, he claimed.
“Tomorrow the cap itself might be changed with another such notification – there is no longer a guarantee in the law. For all we know, the government can introduce a charge for daily person-to-person transactions as well,” Ramesh said.
“The Modi government has yet again shown complete lack of honesty and transparency and has broken the trust of users. Is all of this being done to open digital payments for American companies to appease President Trump?” the Congress general secretary said.
As per a gazette notification dated September 14, no bank or system provider would impose, whether directly or indirectly, any charge on a person making or receiving a payment through RuPay debit card or UPI transaction of up to Rs 2,000.
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association.
It runs real-time payments between individuals nd enables customers to make payments directly to merchants while making purchases. As far as overseas presence is concerned, UPI is now accepted in 11 countries, with Uzbekistan being the latest entry.
The other countries where UPI is accepted are Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece.
UPI, launched on August 25, 2016, has transformed India’s digital payments landscape, with transaction value surging from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, a more than 4,000-fold increase over the decade.
Follow on Twitter | Edited by Neha Khan | | 
