The Indian Finance Ministry has issued a notification confirming that Unified Payments Interface (UPI) transactions up to Rs 2,000 will continue to be free of charge. The directive, dated September 14, also extends this protection to payments made using RuPay debit cards, ensuring no fees are levied on these specific electronic payment methods.
According to the notification from the Department of Financial Services, the government is exercising its powers under Section 10A of the Payment and Settlement Systems Act, 2007. This action aims to specify certain electronic payment modes that will remain free, offering statutory protection against any direct or indirect charges imposed by banks or system providers on individuals making or receiving payments through these channels.
Background on UPI Charges Debate
This development comes approximately a month after Finance Minister Nirmala Sitharaman addressed public concerns regarding the potential reintroduction of the Merchant Discount Rate (MDR) on UPI payments. The debate arose following amendments to Section 10A of the Payment and Settlement Systems Act, which had previously included a blanket statutory zero MDR provision. The updated law granted the government the authority to designate specific payment modes or transactions that would remain free.
Responding to queries on August 6, Sitharaman had clarified that MDR applies solely to merchants and not to end-users or customers. She argued that MDR would support banks and fintech companies in investing further in infrastructure, innovation, and security, with all UPI users ultimately benefiting from these investments. At the time, the UPI and Services Steering Committee, led by the National Payments Corporation of India (NPCI), was yet to finalize its MDR framework.
The Finance Ministry's latest notification effectively solidifies the government's stance, ensuring that smaller value UPI transactions and RuPay debit card payments remain accessible and free for citizens.