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National News (15/09/2026): The Centre has drawn a clear line for digital payments. UPI transfers up to Rs 2,000 and RuPay debit card payments will continue to be zero-charge by law. The protection does not extend beyond that amount.
As per the gazette notification issued by the Finance Ministry on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007, banks and payment system operators are prohibited from levying any direct or indirect fee on the payer or receiver for this category. 300c
What the notification does NOT do is introduce a charge for payments above Rs 2,000. It only removes the legal guarantee of free transactions for the higher slab, creating space for a future fee structure. 1e27
So what changes if you shop for more than Rs 2,000?
Nothing immediately. If you pay a merchant Rs 2,500, Rs 5,000 or Rs 20,000 through UPI today, there is no new levy.
The discussion is about what may come next – Merchant Discount Rate (MDR).
MDR is the commission a merchant pays to banks, payment apps and processors for accepting a digital payment. It is standard on credit cards at 1-3% and on debit cards up to 0.9%. UPI has operated under a zero-MDR model since January 2020. 7d8e
If MDR is introduced for UPI, it will apply only to Person-to-Merchant (P2M) transactions above the threshold. Person-to-Person transfers, even of Rs 20,000 to a friend or family member, will remain free as clarified by the government. 1434
Will consumers feel the pinch?
Technically MDR is borne by the merchant, not the buyer. In practice, many retailers pass on card MDR costs to customers. The same risk exists for UPI.
The slab is small in numbers but huge in value. Only about 4% of P2M UPI payments in 2025-26 crossed Rs 2,000 by count, but those 4% accounted for nearly two-thirds of total UPI value by amount. Overall UPI processed over 24,000 crore transactions worth Rs 314 lakh crore last year. 300c
Sources indicate regulators are exploring a nominal MDR of 0.25% to 0.4%, far lower than credit cards, but no rate, timeline or merchant category has been finalised. The UPI and Services Steering Committee headed by NPCI will decide the framework. 1434
Why is the government considering a fee at all?
After the Taxation and Other Laws (Amendment) Bill, 2026 amended Section 10A, the blanket ban on charging for UPI and RuPay was replaced with a power to notify protected modes. The government used that power to protect up to Rs 2,000. 2267
The official rationale is sustainability. With exponential volumes, the system needs continuous investment in cybersecurity, fraud prevention and infrastructure. A revenue model, rather than subsidy alone, is needed to encourage more players and keep UPI robust and future-ready. a7e02267
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