The Union Ministry of Finance has issued a notification under Section 10A of the Payment and Settlement Systems Act, 2007, prohibiting banks from charging fees on UPI transactions up to Rs 2,000 and RuPay debit card payments. This move comes after Parliament passed the 2026 Taxation and Other Laws Amendment Bill in August.
In a significant development, the Union government announced on Monday that banks and system providers will not be allowed to impose charges on Unified Payments Interface (UPI) transactions worth up to Rs 2,000 and RuPay debit card payments. The notification was issued under Section 10A of the Payment and Settlement Systems Act, 2007.
According to a report by The Indian Express, during the financial year 2025-’26, transactions exceeding Rs 2,000 accounted for only 4% of total person-to-merchant UPI payments. However, these high-value transactions represented nearly two-thirds of the total value of such payments.
In August, Parliament passed the 2026 Taxation and Other Laws Amendment Bill, which allowed banks and other service providers to levy charges on payments through UPI and RuPay debit cards. The legislation amended the 2007 Payment and Settlement Systems Act, causing concerns among consumers that merchants might pass off the cost in future.
However, the finance ministry later clarified that consumers making UPI payments will not face any transaction charges. It stated that all person-to-person transactions will continue to be free of charge. The ministry also mentioned that only a limited set of merchant transactions will attract the Merchant Discount Rate (MDR), which is a fee charged to businesses by banks to cover the costs of processing transactions. The MDR typically ranges from 1% to 3% of the transaction value for credit card payments and can be up to 0.9% for debit card transactions.
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