UPI payments up to Rs 2,000 will stay free of charge for users, but the government has now opened the door for banks to levy fees above that limit.

The Finance Ministry issued a gazette notification on 14 September, formally amending the Payment and Settlement Systems Act, 2007.

The notification protects two payment modes from charges. Debit card transactions made through RuPay are covered with no cap on the amount, while UPI transactions are protected only up to Rs 2,000.

Banks and payment providers cannot charge users, whether directly or indirectly, on either of these.

That Rs 2,000 cap on UPI is the part worth noting. The notification says nothing about UPI payments above that mark, which clears the way for charges on higher-value UPI transactions somewhere down the line.

This isn’t a sudden move either. It follows changes Parliament made to the Payment and Settlement Systems Act last month, which gave the government the power to decide which payment modes stay protected from charges.

Those changes also opened the door to revisiting the zero-MDR policy that has kept UPI free of merchant charges since it launched.

That job falls to the National Payments Corporation of India, or NPCI. Sources indicate NPCI could put out detailed guidelines on charges for transactions above Rs 2,000 within the coming week, based on inputs from its UPI Services Steering Committee.

The government has been careful to stress that regular UPI users have nothing to worry about.

Any charges under discussion would fall on merchants through the Merchant Discount Rate, not on the person paying or receiving money.

To put the scale of UPI in context, annual transactions on the platform have grown from just 1.78 crore in FY17 to over 24,162 crore in FY26.

Over the same period, the total value of transactions jumped from Rs 0.07 lakh crore to Rs 314 lakh crore.

For now, everyday UPI users can carry on paying for groceries, food and transport without any extra cost, at least until NPCI spells out what happens beyond the Rs 2,000 mark.

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