Summary of this article
UPI payments up to Rs 2,000 cannot attract charges.
RuPay debit card payments are also protected from charges.
Higher-value UPI transactions could see merchant charges later.
For millions of people, Unified Payments Interface (UPI) has become a routine way to pay for groceries, food, transport, and other everyday purchases. A new Gazette notification has now formally specified the types of digital payments that cannot be subjected to charges by banks or payment system providers.
The notification, issued by the Union Ministry of Finance on September 14, 2026, covers UPI transactions of up to Rs 2,000 and payments made through RuPay debit cards. It has been issued under the Payment and Settlement Systems Act, 2007.
What The Gazette Notification Says
Under the notification, banks and system providers cannot impose a charge, either directly or indirectly, on a person making or receiving a payment through the specified digital modes. For UPI, the protection applies to transactions where the payment amount does not exceed Rs 2,000. RuPay debit card payments are also covered under the notification.
This means that a UPI payment of Rs 2,000 or less cannot attract a charge from a bank or system provider under this provision. The same protection applies to payments made using RuPay debit cards. The notification does not state that all UPI transactions will be free from charges regardless of their value. Its specific protection covers UPI transactions up to Rs 2,000 and RuPay debit card payments.
What It Means For UPI Users
For consumers, the immediate takeaway is linked to the Rs 2,000 limit. Payments within this threshold fall under the protection specified by the government. The notification also covers the person receiving the payment. This is relevant for merchants accepting eligible UPI payments, as the restriction is not limited only to the person making the payment.
The notification comes after Parliament made changes to the Payment and Settlement Systems Act, 2007 earlier this year. Those changes altered the legal framework governing charges on electronic payment modes.
MDR on UPI
The earlier amendment to the law created a route for the government to notify electronic payment modes for which charges could be permitted. However, the September 14 Gazette notification itself does not announce any merchant discount rate or introduces an MDR on UPI transactions.
MDR refers to a fee associated with processing merchant payments. The government had previously indicated that if MDR is introduced, it could apply to a limited category of merchant transactions above a specified threshold.
