New Delhi, September 15, 2026: 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, providing clarity on the applicability of charges following recent changes to the payment settlement framework.
According to a Gazette notification dated September 14, banks and payment system providers cannot impose any charge, either directly or indirectly, on a person making or receiving a payment through a RuPay debit card or a UPI transaction of up to Rs 2,000.
The notification follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007, which created an enabling framework for imposing Merchant Discount Rate (MDR) on UPI and other notified electronic payment modes.
Parliament clears amendment during Monsoon Session
The amendment was passed by Parliament during the Monsoon Session, which concluded on August 13, 2026.
Following the passage of the legislation, the government had indicated that the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would determine applicable MDR rates.
The government had also explained that the rapid expansion in digital transactions has created a need for continuous investment in cybersecurity, fraud prevention and payment infrastructure.
According to the government, a sustainable revenue model could help support market expansion, encourage greater competition and allow more companies to participate in the digital payments ecosystem.
At the same time, the latest notification ensures that users making or receiving UPI payments of up to Rs 2,000 and users making payments through RuPay debit cards are not subjected to such charges.
Focus on sustainable digital payments ecosystem
The government has maintained that relying exclusively on subsidies may not be sustainable as India’s digital payments ecosystem enters its next phase of growth.
With UPI transaction volumes expanding rapidly, the payment infrastructure requires continuous technological upgrades and stronger systems to tackle cyber fraud and security threats.
The broader objective is to develop a payment ecosystem that remains robust, inclusive and future-ready, while creating conditions for greater participation and competition among payment service providers.
UPI strengthens India’s digital economy
UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India and the Indian Banks’ Association.
The real-time payment platform enables individuals to transfer money directly between bank accounts and allows consumers to make instant payments to merchants.
Since its launch on August 25, 2016, UPI has transformed India’s digital payments landscape. Transaction value increased from around Rs 0.07 lakh crore in FY17 to approximately Rs 314 lakh crore in FY26, representing a more than 4,000-fold rise over the decade.
The platform has also expanded internationally and is now accepted in 11 countries. Uzbekistan is the latest addition, joining Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia and Greece.
The continued expansion of UPI reflects India’s growing digital payments infrastructure and its increasing role in both domestic and international transactions.