Government Waives Charges on UPI and RuPay Payments Up to Rs 2,000

In a major boost to small-value digital transactions, the Department of Financial Services under the Ministry of Finance has directed banks and payment service providers not to levy any charges on UPI transactions and RuPay debit card payments of up to Rs 2,000.

The decision was formalised through an official Gazette notification issued on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007. Under the new rule, customers and merchants will not have to pay any direct or indirect service charges on digital payments of up to Rs 2,000.

For example, if a customer pays Rs 800 to a grocery store, roadside vendor, or any small merchant using UPI or a RuPay debit card, no additional fee can be charged by banks or payment service providers.

The move is expected to strengthen digital payments at the grassroots level by reducing transaction costs for small businesses, local merchants, and millions of consumers who rely on low-value digital payments every day.

The notification, however, does not clarify the fee structure for UPI transactions above Rs 2,000. Meanwhile, under a recently introduced government bill, the Centre is considering allowing a nominal Merchant Discount Rate (MDR) only on selected merchant transactions that exceed a prescribed threshold.

Importantly, personal UPI transfers between individuals and small-value digital payments will continue to remain completely free, ensuring that everyday digital transactions remain convenient, accessible, and cost-free for the general public.