Is a Fee Coming for UPI Payments Over ₹2,000? Here's What You Need to Know!
Upcoming Decisions on UPI Charges
A committee made up of bank representatives, service providers, and various associations is set to determine the fees applicable to UPI payments exceeding ₹2,000 for merchants. This UPI & Services Steering Committee consists of 22 members, including the Indian Banks’ Association (IBA) and the Payments Council of India (PCI).
Sources indicate that the committee will soon decide on the Merchant Discount Rate (MDR) for UPI transactions above ₹2,000, taking into account factors like market growth and self-sustainability. For context, Brazil's PIX system charges about 0.33%, while China imposes a fee of 0.40%.
The government announced that UPI transactions, including those made via RuPay debit cards, will remain free for amounts up to ₹2,000 from person to merchant. Additionally, all person-to-person UPI transactions will continue to incur no charges.
A gazette notification issued on September 14 states that no bank or service provider can impose any fees, directly or indirectly, on payments made through RuPay debit cards or UPI transactions up to ₹2,000.
In response to this development, the Opposition Congress criticized the government, claiming that it has subtly set the stage for charging fees on UPI transactions.
This notification follows an amendment to section 10 A of the Payment and Settlement Systems Act, 2007, which allows for the imposition of an MDR on UPI and other electronic payment methods. The amendment was approved by Parliament during the Monsoon Session in August.
During a parliamentary debate on the bill, Finance Minister Nirmala Sitharaman assured that UPI payments would remain free for consumers, with any future charges applying only to specific categories of merchant transactions.
To ease concerns about potential charges on UPI transactions, the minister emphasized that most merchant transactions, especially low-value ones, would continue to be free. She stated, “The vast majority of merchant transactions, including ordinary, low-value transactions, will continue to remain free. Any future MDR will apply only to a limited category of merchant transactions above a prescribed threshold.”
Sitharaman highlighted that India boasts the world's largest real-time payment system, noting that in July 2026 alone, the country processed 2,366 crore UPI transactions totaling ₹29.9 lakh crore.
UPI, managed by the National Payments Corporation of India (NPCI), is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association. It facilitates real-time payments between individuals and allows customers to pay merchants directly during purchases. UPI is now accepted in 11 countries, with Uzbekistan being the latest addition, alongside Singapore, the UAE, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece.
Since its launch on August 25, 2016, UPI has revolutionized India's digital payment landscape, with transaction values soaring from ₹0.07 lakh crore in FY17 to approximately ₹314 lakh crore in FY26, marking an increase of over 4,000 times in just a decade.