The Finance Ministry has recently issued a new notification, according to which there will be no charges or fees on transactions up to ₹2,000 made through UPI and RuPay debit cards. This decision has been taken by the Central Government under the recently amended Payment and Settlement Act, 2026, which will provide great relief to consumers and small businesses.
No Charges on UPI Transactions up to ₹2000
Finance Minister Nirmala Sitharaman has clarified that no new charges will be imposed on ordinary consumers under the new amendments. Payments made to roadside vendors, cab drivers and small grocery shops will remain free. Users of Google Pay, PhonePe and other digital platforms will be able to transact as usual. The rule has been implemented under Section 10A of the Basic Act.
What will Happen if the Transaction is Above ₹2,000?
While transactions up to ₹2,000 will remain completely free, a MDR is likely to be levied in the coming days for Person-to-Merchant (P2M) transactions above that value. However, this fee will only be charged by large merchants and the customer will not have to pay anything extra from their pocket. In addition, the government has clarified that transfers from one personal bank account to another will always be free.
Why this Decision is Taken by Government?
According to government statistics, currently only 4% to 5% of UPI transactions in the country are above ₹2,000. But surprisingly, this limited number of transactions accounts for about 65% of the total payment value. There is a discussion about imposing MDR between 0.25% and 0.4% on large business transactions to cover the cost of maintaining and operating the digital payment system. However, this will not have any impact on the digital payments and daily expenses of the common citizen.
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