Centre Prohibits Fees on UPI Transactions Up to Rs 2,000 and RuPay Debit Card Payments

Key facts

• The Central government has barred banks and payment system providers from levying charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 and payments made through RuPay debit cards.
• On September 14, the government notified amendments to the Payment and Settlement Systems Act, 2007, specifying that banks cannot impose charges on UPI transactions of up to Rs 2,000.
• Under Section 10A of the Payment and Settlement Systems Act, 2007, the Central Government prohibits banks and system providers from imposing, directly or indirectly, any charges on persons making or receiving payments using RuPay debit cards and UPI transactions up to Rs 2,000.
• A gazette notification classified RuPay-powered debit cards and UPI transactions of up to Rs 2,000 as electronic modes of payment.
• Charges could still be introduced on UPI transactions above Rs 2,000, although a Merchant Discount Rate (MDR) has not yet been implemented for UPI payments.
• In August, the government opened the door to introducing a nominal Merchant Discount Rate (MDR) on a limited set of UPI merchant transactions above a certain threshold, while assuring that consumer and person-to-person payments will remain free.
• UPI processed a record 24.51 billion transactions worth Rs 29.8 lakh crore in August, according to the National Payments Corporation of India (NPCI).
• UPI transaction value in August was Rs 29.82 lakh crore, up from Rs 24.85 lakh crore a year ago, registering 20 per cent annual growth, while volume rose 22 per cent annually from 19.63 billion to 24.51 billion.
• Launched on August 25, 2016, UPI transaction value surged from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, a more than 4,000-fold increase.
• NPCI, an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association (IBA), is an umbrella organisation for operating retail payments and settlement systems in India.