Govt bars charges on RuPay debit cards, UPI transactions up to ₹2,000

The government on Monday notified RuPay-powered debit cards and UPI transactions of up to ₹2,000 as electronic payment modes on which banks and system providers cannot impose charges.

The Finance Ministry, in a notification issued under the Payment and Settlement Systems Act, 2007, said no bank or system provider shall impose, directly or indirectly, any charge on a person making or receiving a payment through the specified electronic modes.

The two modes specified by the government are debit cards powered by RuPay and UPI transactions up to ₹2,000.

The notification follows the amendment to Section 10A of the PSS Act through the Taxation and Other Laws (Amendment) Act, 2026.

The amendment replaced the earlier reference to electronic payment modes prescribed under the Income-tax Act with a provision allowing the central government to specify one or more electronic modes of payment under the PSS Act.

The change had raised questions over the future of the zero-Merchant Discount Rate (MDR) regime for UPI, as it gave the government the flexibility to determine which electronic payment modes would be protected from charges.

The amendment itself did not introduce an MDR or prescribe any fee for UPI transactions.

With Monday's notification, the government has specified UPI transactions up to ₹2,000 and RuPay debit card payments for protection under Section 10A.

The notification does not extend the no-charge provision under this section to UPI transactions above ₹2,000.

Finance Minister Nirmala Sitharaman had last month said any MDR on digital transactions would apply to merchants and not customers, noting that a decision on MDR would be taken by the UPI and Services Steering Committee headed by NPCI.