Delhi bars bank charges on UPI payments up to Rs 2,000 and on RuPay debit

The Finance Ministry notified on Monday that banks and payment-system providers may not impose, directly or indirectly, any charge on a person making or receiving a payment through two specified electronic modes: a debit card powered by RuPay, and a Unified Payments Interface transaction of up to 2,000 rupees.

The gazette uses section 10A of the Payment and Settlement Systems Act, 2007, a clause added when Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026 last month. That amendment let the Centre name which payment modes would stay protected from charges and which would not. Monday's notice is the first use of that power.

The effect is a split. Transfers of 2,000 rupees and below on UPI remain free of bank or system-provider fees for both sides of the transaction. So do RuPay debit-card payments covered by the notice. Larger UPI transfers are no longer inside the statutory shield. A final decision on whether to levy a merchant discount rate on those larger transfers, and at what rate, has not been notified.

Why the 2,000-rupee line exists

Since 2020 the government has kept MDR at zero on UPI and RuPay debit in order to push digital payments. The costs sat with banks and the National Payments Corporation of India. PhonePe, Razorpay and MobiKwik executives have argued this year that the rails now need a fee if they are to keep adding capacity and fraud controls. Finance minister Nirmala Sitharaman said in August that any MDR would fall on merchants, not on customers.

Monday's text is stricter than that talking point for the protected slice. It bars a charge on the person making or receiving the payment, which includes the merchant on a 1,500-rupee QR sale. For a 5,000-rupee UPI sale the statute no longer forbids a fee. Whether one appears depends on a later notification or on NPCI rules.

UPI now carries a large share of small retail payments in India. A typical tea-stall or kirana ticket sits under 2,000 rupees. That is the political core of the exemption. The fights about who funds the rails will happen above that line, on bill payments, merchant settlement and larger person-to-merchant transfers.

What users should assume tomorrow

A customer paying 800 rupees on GPay, PhonePe or a bank UPI app should see no new fee on either side as a result of this gazette. A customer tapping a RuPay debit card at a terminal sits inside the same shield. A customer sending 25,000 rupees to a merchant is outside it. No bank has announced a schedule of charges for that second group because the government has not yet said they must, or may, collect one.

The notice is therefore both a consumer protection and a boundary. It writes the free tier into law. It also confirms that the zero-MDR blanket of 2020 no longer covers the whole UPI system. The next document that matters is the one that either leaves large-value UPI free by practice or puts a number on the merchant fee.