New Delhi: The government has clarified that banks and payment system providers cannot levy charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000, providing regulatory certainty over smaller digital payments.
The restriction also applies to payments made using RuPay-powered debit cards, according to a Finance Ministry notification issued under the Payment and Settlement Systems Act, 2007.
No Direct Or Indirect Charges
The notification specifies RuPay debit cards and UPI transactions of up to Rs 2,000 as electronic modes of payment on which charges cannot be imposed.
It said no bank or system provider can directly or indirectly charge either the person making the payment or the recipient when these specified payment modes are used.
The move clarifies rules governing charges on smaller UPI transactions amid concerns that recent regulatory changes could eventually result in users paying fees for digital payments.
P2P Transactions Remain Free
The government had earlier clarified that consumers would not be charged for making UPI payments and that all person-to-person, or P2P, transactions would continue to remain free.
It had also ruled out the introduction of a blanket merchant discount rate (MDR) covering all UPI merchant payments.
The latest notification provides statutory backing for keeping transactions of up to Rs 2,000 outside the charging framework.
MDR Possible For Select Payments
The Finance Ministry had, however, indicated that an MDR could potentially be introduced for a limited category of merchant transactions exceeding a specified threshold.
If such charges are introduced, they would apply only to select merchant payments above the threshold and would be levied at a nominal rate, the government had said.
It also indicated that any future UPI-related MDR would be significantly lower than charges typically applicable to debit and credit card transactions.
The clarification assumes significance as UPI has become one of India’s most widely used digital payment systems for everyday transactions.
The government’s latest notification removes uncertainty surrounding smaller transactions and ensures that users and recipients can continue making UPI payments of up to Rs 2,000 without banks or payment system providers imposing additional charges.
