Delhi, Sept. 15: Consumers making Unified Payments Interface (UPI) payments of up to Rs 2,000 will not face bank charges, with the government formally prohibiting banks and system providers from imposing direct or indirect fees on such transactions.
The Finance Ministry issued a gazette notification on Monday under Section 10A of the Payment and Settlement Systems Act, 2007, specifying UPI transactions up to Rs 2,000 and RuPay-powered debit card payments as electronic modes of payment covered by the charge prohibition.
Under the notification, no bank or system provider can impose a charge on a person making or receiving a payment through either of the specified modes. The provision covers charges imposed either directly or indirectly.
The notification also clarifies the regulatory position on payment charges amid recent debate over amendments to the Payment and Settlement Systems Act and concerns about whether UPI users could eventually face transaction fees.
The government had clarified last month that consumers would not be charged for making payments through UPI. It had also said that any future merchant discount rate (MDR) would be restricted to selected merchant transactions above a specified threshold rather than applied universally.
According to the Finance Ministry, all person-to-person (P2P) UPI transactions will continue to remain free. It also ruled out a blanket MDR for merchants.
If MDR is introduced, the government said, it would apply only to a limited category of merchant transactions above a certain threshold and at a nominal rate. The Finance Ministry further stated that such charges would be significantly lower than the MDR applicable to debit and credit card transactions.
The latest notification specifically places RuPay-powered debit cards and UPI transactions up to Rs 2,000 within the electronic payment modes for which users cannot be charged by banks or system providers.
The government’s clarification comes against the backdrop of concerns surrounding the recent amendment to the 2007 law and its possible implications for charges on UPI transactions. The notification establishes the stated protection against direct or indirect charges for the specified payment modes and transaction value.
