Govt bars UPI charges up to Rs 2,000, opens door for MDR on larger payments

The government has barred banks and payment system providers from charging fees on Unified Payments Interface (UPI) transactions up to Rs 2,000 and RuPay debit card payments, under a notification issued on September 14. The order follows the Taxation and Other Laws (Amendment) Act, 2026, which removed the blanket zero-MDR protection and empowered the Centre to specify which transactions remain charge-free. The notification does not impose a Merchant Discount Rate (MDR), but leaves the NPCI-led committee to decide on fees for transactions above Rs 2,000.

Nearly 96% of UPI transactions by volume fall within the Rs 2,000 threshold, according to industry data. The Congress accused the government of setting the stage for UPI charges and questioned whether the move aims to open digital payments to American firms. The Finance Ministry has said no charges will apply to consumers and any future MDR will be nominal and confined to select merchant transactions. The RBI and NPCI are meeting lenders on Tuesday, with regulators reportedly leaning toward a 0.4% charge on large merchant payments.