The Finance Ministry on Monday, 14 September issued a formal gazette notification barring banks and payment system providers from levying any charge — direct or indirect — on Unified Payments Interface (UPI) transactions of up to ₹2,000. The rule equally covers payments made through RuPay-powered debit cards, giving millions of everyday digital payment users a clear legal shield against fee imposition.

What the Notification Says

The Finance Ministry notified the changes under Section 10A of the Payment and Settlement Systems Act, 2007, formally designating RuPay debit cards and UPI transactions up to ₹2,000 as protected 'electronic modes of payment.' The notification states explicitly: 'No bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment specified.'

This legal classification is significant — it moves the zero-charge protection from policy guidance to enforceable statute, reducing ambiguity that had fuelled recent public debate.

Context: The MDR Debate

The notification follows weeks of concern sparked by a recent amendment to the Payment and Settlement Systems Act, 2007, which raised fears that UPI users could eventually face charges. Last month, the government had already sought to reassure users, clarifying that all person-to-person (P2P) UPI transactions would remain permanently free, and that there would be no blanket merchant discount rate (MDR) on merchants.

The ministry further specified that if MDR charges are introduced in future, they would apply only to 'a limited set of merchant transactions above a certain threshold and at a nominal rate' — and would be 'significantly lower' than the MDR applicable to debit or credit card transactions. Notably, no such threshold has been publicly defined yet.

Who Is Protected

The notification directly protects both the payer and the recipient in any UPI or RuPay debit card transaction up to ₹2,000. This covers the vast bulk of everyday retail transactions — grocery purchases, utility payments, small merchant settlements — that form the backbone of India's digital payments ecosystem. UPI processed over 14 billion transactions in a single month earlier this year, underscoring the scale of users the rule covers.

What Happens Next

While the zero-charge guarantee is now statutory for sub-₹2,000 transactions, the government has left the door open for a future MDR framework on higher-value merchant payments. Industry bodies and merchant associations are expected to engage with the ministry on the contours of any such framework. For now, the notification provides regulatory certainty that payments ecosystem stakeholders and consumer groups had been seeking since the amendment triggered alarm.