In a major move to boost digital transactions, the Indian government has amended the Payment and Settlement Act, 2007, prohibiting banks from charging fees on UPI and RuPay-powered debit card payments up to ₹2,000.
- Banks are prohibited from imposing any direct or indirect charges on UPI transactions up to ₹2,000.
- RuPay-powered debit card transactions under ₹2,000 are also exempt from fees.
- The government has notified amendments to the Payment and Settlement Act, 2007.
- This move aims to protect small-value digital transactions from additional costs.
The Government of India has announced a significant regulatory shift aimed at safeguarding small-value digital transactions. Through a government gazette notification, the authorities have specified that RuPay-powered debit cards and Unified Payments Interface (UPI) transactions amounting to up to ₹2,000 are classified as essential electronic modes of payment that must remain free of charge.
Effective from the notification dated September 14, 2026, the amendment to the Payment and Settlement Act, 2007 mandates that no bank or system provider shall impose any direct or indirect charge on a person making or receiving payments through these specific modes. This policy ensures that the cost of digital entry remains zero for the vast majority of daily micro-transactions.
Why This Matters
BozokMedia analysis shows that this decision is a strategic move to maintain the momentum of India's digital revolution. By capping the fee-free threshold at ₹2,000, the government is providing a safety net for millions of small merchants and daily wage earners who rely heavily on UPI. This prevents the 'cost of transaction' from becoming a barrier to financial inclusion.
Ensuring zero-cost micro-transactions is vital for maintaining the massive scale and velocity of India's digital payment ecosystem.
Historically, there has been ongoing debate regarding whether banks should be allowed to charge for UPI services to recover operational costs. While an earlier provision prevented such charges, there were discussions about allowing fees on larger transfers. This latest notification clarifies that while larger transfers may eventually face scrutiny, the micro-transaction segment is now legally protected.
Comparison of Transaction Fee Status
| Transaction Mode | Amount Limit | Applicable Charges |
|---|---|---|
| UPI Payments | Up to ₹2,000 | Zero (Free) |
| RuPay Debit Card | Up to ₹2,000 | Zero (Free) |
| High-Value UPI | Above ₹2,000 | Decision Pending |
The government has further reassured the public that the vast majority of transactions in the country will continue to remain free for both customers and merchants. The final decision on the levy of charges for transactions exceeding the ₹2,000 limit is yet to be determined by the relevant authorities.
Frequently Asked Questions (FAQs)
1. Will I be charged for a UPI transfer of ₹1,500?
No, according to the new notification, all UPI transactions up to ₹2,000 are exempt from any direct or indirect bank charges.
2. Does this rule apply to RuPay cards?
Yes, the government has specifically included RuPay-powered debit card transactions up to ₹2,000 in this fee-free category.
