Using UPI for More Than Rs 2,000? Here’s What It Means for Your Wallet

The government has clarified the rules around charges on digital payments. In recent days, there have been concerns over whether recent changes to the Payment and Settlement Systems Act, 2007, could eventually result in charges for UPI users in India. The latest notification, issued by the Ministry of Finance on Monday, reveals that consumers will not be charged for using UPI, while any future merchant discount rate (MDR) would apply only to select transactions.

UPI Payments Up to Rs. 2,000 Cannot Attract Charges

The Finance Ministry, through its Department of Financial Services, has specified UPI transactions of up to Rs. 2,000 and RuPay-powered debit cards as “electronic modes of payment” under Section 10A of the Payment and Settlement Systems Act, 2007. The gazette notification states that no bank or system provider can impose any direct or indirect charge on a person making or receiving a payment through either of these specified electronic modes.

In simple terms, this means that UPI payments of up to Rs. 2,000 cannot attract a charge from banks or system providers. The same provision applies to payments made using RuPay-powered debit cards.

The clarification comes after concerns emerged around amendments to the Payment and Settlement Systems Act, 2007, with questions being raised over whether the changes could eventually lead to charges being imposed on UPI transactions.

The government had already clarified last month that consumers would not be charged for making payments through UPI. It also added that any future merchant discount rate, or MDR, would be restricted to select transactions above a specified threshold rather than being applied universally.

Person-to-person (P2P) UPI transactions, meanwhile, will continue to remain free. There will not be a blanket MDR imposed on merchants, either.

While the gazette notification specifically establishes the two payment modes covered by the no-charge provision, it does not state that all possible UPI transactions will necessarily be covered by the Rs. 2,000 threshold.