UPI Transactions: Digital payments through the Unified Payments Interface (UPI) worth up to Rs 2,000 will continue to remain free of direct and indirect charges for users. The Finance Ministry has formally notified the provision, offering clarity on the transactions covered under the no-charge framework.
The notification is particularly significant for everyday digital payments, as industry data indicates that nearly 96 per cent of UPI transactions by volume fall within the Rs 0-Rs 2,000 range.
Government Clarifies No-Charge Rule for UPI Payments
The Department of Financial Services (DFS), under the Ministry of Finance, issued a Gazette notification on September 14 specifying the electronic payment methods covered by the provision.
The notification identifies two payment modes:
- Debit cards powered by RuPay
- UPI transactions of up to Rs 2,000
Under the notified framework, banks and system providers are not permitted to levy a charge, either directly or indirectly, on individuals making or receiving payments through these specified modes.
The government issued the notification under Section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007).
Nearly 96% of UPI Transactions Fall Under the Threshold
The Rs 2,000 limit covers a substantial share of India’s UPI payment activity. According to industry data, approximately 96 per cent of UPI transactions by volume are valued between Rs 0 and Rs 2,000.
The same trend can be seen in the person-to-merchant (P2M) segment. Industry estimates suggest that only about 4 per cent of P2M UPI transactions exceed Rs 2,000. This means the vast majority of merchant payments remain within the threshold protected from charges.
For consumers, this ensures that routine UPI payments such as small purchases and everyday merchant transactions remain covered by the no-charge provision.
What About UPI Transactions Above Rs 2,000?
The latest notification does not introduce a Merchant Discount Rate (MDR) or establish a new fee structure for UPI payments exceeding Rs 2,000.
This distinction is important. The government order specifically prohibits banks and system providers from imposing direct or indirect charges on UPI transactions up to Rs 2,000. It does not prescribe a charging mechanism for transactions above the specified limit.
Therefore, the notification should not be interpreted as introducing MDR for higher-value UPI transactions. Instead, its primary purpose is to clearly identify the electronic payment modes protected from charges under the relevant provision of the law.
UPI Continues to Handle Massive Transaction Volumes
The latest move comes as India’s UPI ecosystem continues to operate at an enormous scale.
According to data from the National Payments Corporation of India (NPCI), UPI processed more than 24,500 million transactions in August 2026, with the total value of transactions reaching nearly Rs 29.82 lakh crore.
The figures underline how deeply UPI has become integrated into India’s digital payments ecosystem, handling everything from small everyday purchases to high-value transactions.
With the Rs 2,000 threshold now explicitly covered under the government’s no-charge notification, a large majority of UPI payments by volume will continue to remain protected from direct and indirect charges.