New Delhi, Sept 15: Will UPI users have to pay a fee for making digital payments above ₹2,000? The answer, for consumers, is no- at least for now.
The Finance Ministry, through a gazette notification, has clarified that the prohibition on charging users covers payments made through RuPay debit cards and UPI transactions up to ₹2,000. Banks and payment system providers cannot impose charges, directly or indirectly, on people making or receiving payments through these modes within the specified limit.
📲Follow our WhatsApp Channel for the latest news, breaking updates, and important headlines. Stay connected with us for more updates!
The issue of UPI charges came into focus after Parliament cleared the Taxation and Other Laws (Amendment) Bill, 2026.
Will UPI payments above ₹2,000 attract charges?
Finance Minister Nirmala Sitharaman, while speaking in the Rajya Sabha on August 11, said the amendment to Section 10A was only an enabling provision and did not introduce any tax or transaction charge for UPI users.
She also clarified that street vendors, cab drivers, kirana shop owners and small merchants would not be directly charged for receiving UPI payments. If any fee is introduced in the future, it would be applicable to merchants rather than customers.
What is MDR?
Merchant Discount Rate (MDR) is a processing fee paid by merchants to banks or payment service providers when customers make digital payments.
UPI has remained under a zero-MDR regime since 2020, a policy introduced to encourage digital payments and reduce dependence on cash.
Also Read: Radhika Merchant mesmerises with her soulful dance on ‘Ekadantaya Vakratundaya’
However, the recent amendment removes an existing provision that prevented banks and payment service providers from charging MDR on UPI transactions. This has triggered fresh discussion over whether limited charges could eventually be introduced for certain merchant transactions.
Why is MDR being discussed again?
UPI has emerged as the world's largest retail real-time payment system by transaction volume. According to a 2025 International Monetary Fund report, UPI processed 24.51 billion transactions worth ₹29.82 lakh crore in August.
Maintaining such a large digital payment network involves significant costs related to technology, cybersecurity, fraud prevention and customer support. At present, these costs are borne largely by banks, payment apps and the National Payments Corporation of India (NPCI), with the government also providing annual incentives to banks under the zero-MDR system.
Payment companies have argued that allowing MDR on certain transactions could help fund further investment in the digital payment ecosystem.
Brokerage firm Jefferies estimated that merchant fees on larger UPI transactions could potentially generate ₹5,000 crore to ₹10,000 crore annually for the industry.
Who will decide whether MDR is introduced?
The Bill, cleared by both Houses of Parliament, does not itself impose an MDR charge.
Instead, it gives the government the power to permit such charges.
According to Sitharaman, the UPI & Services Steering Committee, headed by NPCI and comprising 22 members, including major banks and the two leading UPI apps, would decide whether MDR should be introduced and, if so, determine its scope and structure.
Also Read: From poverty to medical college: Five siblings chase their dream
For now, no decision to introduce MDR on UPI payments has been taken.
So, while the rules have opened the door for possible merchant charges in the future, ordinary UPI users do not currently have to pay a transaction fee for making payments above ₹2,000.
