India sets Rs 2,000 floor for UPI transaction charges

The rule change

India notified amendments to the Payment and Settlement Act on September 14, as The Hindu reported. Banks cannot impose charges on UPI payments or RuPay debit card transactions up to Rs 2,000. The notification reversed an earlier provision that blocked all fees on UPI digital payments, according to Reuters.

What this enables

The change allows merchant discount rate (MDR) to be charged on UPI payments above Rs 2,000, according to The Economic Times. MDR is the fee merchants pay banks and payment processors for handling digital transactions, as Business Standard noted. The Rs 2,000 threshold applies to both UPI and RuPay-powered debit cards.

Transaction scale

UPI handled Rs 29.8 lakh crore in transaction value during the reporting period, near the record high of Rs 29.9 lakh crore set in May and July 2026, according to indiatvnews.com citing NPCI data. BBC reported that UPI digital transactions are surging towards a billion per day. A 2025 IMF report identified UPI as the world's largest retail fast-payment system by volume, according to Investing.com UK.

What this means for you

If you are a consumer, payments up to Rs 2,000 via UPI or RuPay debit cards remain free of bank charges. For amounts above Rs 2,000, merchants may pass on processing fees, though the government notification does not mandate this. If you are a merchant, you may now be subject to MDR on UPI transactions over Rs 2,000, which could affect your cost of accepting digital payments. The threshold protects smaller everyday transactions while allowing cost recovery on larger ones.

Sources

• Govt bars bank charges on UPI payments up to Rs 2,000 and RuPay debit card transactions — indiatvnews.com
• Special Story: UPI Payment Without Internet? New Tap & Pay Feature Explained - YouTube — youtube.com
• UPI Users Gets Relief, No Charges On Transactions Up To ₹2000, Large Entities May Pay MDR — youtube.com
• UPI Payments Above ₹2000 May Face Surcharge: What Users Need To Know - YouTube — youtube.com
• Merchant fee on UPI rolling out as transaction floor set at Rs 2,000 - The Economic Times — m.economictimes.com
• Why cash continues to thrive even as India's digital payments grow - BBC — bbc.com
• Govt paves way for banks to levy charges on UPI payments above ₹2000 — business-standard.com
• Chinese automakers expand lead in global EV market - UPI .com — upi.com
• India opens door to fees on large payments made via UPI system - Reuters — reuters.com
• India updates payment rules on UPI transaction fees - Investing.com UK — uk.investing.com
• Govt. bars bank charges on payments up to ₹2000 via UPI , RuPay-powered debit cards — thehindu.com
• India opens door to fees on large payments made via UPI system - TradingView — tradingview.com
• India opens door to fees on large payments made via UPI system | MarketScreener — marketscreener.com
• Chubu Electric chiefs to quit over nuclear data fraud , NHK Says - Ground News — ground.news