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UPI Payment Rules: New Rules Are Here! Will You Now Pay for UPI Transactions? Check Details
The government has declared UPI transactions up to ₹2,000 as fee-free. But this doesn't mean that payments above this amount will now have charges.
Understanding UPI Transactions
If you regularly use UPI for payments, you need to understand this ₹2,000 limit. On 14th September 2026, the Central Government issued a new gazette notification. It declared UPI transactions up to ₹2,000 as a fee-free electronic payment method.
Are UPI payments getting more expensive?
This doesn't mean UPI payments over ₹2,000 are now more expensive. The government has not imposed any new fees yet. The only change is that transactions above ₹2,000 are no longer legally protected from future fees, which opens up the possibility of charges later on.
What is the new rule?
In the new notification, the government has marked two electronic payment methods as charge-free: debit card payments using RuPay and UPI transactions up to ₹2,000. According to the notification, banks or payment service providers cannot directly or indirectly charge any fee for sending or receiving money through these methods. This is where the ₹2,000 limit applies. The limit is important because UPI payments over ₹2,000 are no longer covered by this special legal protection.
Will there be a fee for UPI payments over ₹2,000?
No, and this is the most important point. The new notification does not impose any new fee on UPI payments over ₹2,000. This means if you make a UPI payment of ₹5,000, no charge will be deducted from your account because of this notification. All that has happened is that the government has opened a legal path to potentially impose fees on large UPI payments in the future. The final decision on whether to impose a fee, how much it will be, and how it will be collected is still pending.
Why was the ₹2,000 limit introduced?
To understand this, we need to look at the old rule. According to the notification from 30th December 2019, UPI payments had legal protection with zero charges, and there was no limit on the payment amount. This meant whether it was a ₹100 or a ₹50,000 UPI payment, it was protected. Now, for the first time, the new notification has added a ₹2,000 limit. So, UPI payments up to ₹2,000 are protected, but payments above that limit are excluded.
Will the customer be charged?
According to the government's statement, even if there is a fee for UPI, the burden will not be on the customer. This fee might be collected from the shopkeeper or merchant in the form of MDR (Merchant Discount Rate). In simple terms, say you pay ₹5,000 at a shop via UPI. If MDR is introduced on such transactions in the future, the fee will be taken from the merchant receiving the payment, not the customer.
What is MDR?
Merchant Discount Rate (MDR) is the fee that a shopkeeper or merchant pays to the bank or payment company for accepting digital payments. This kind of fee already applies to debit and credit cards. However, this fee was removed for UPI from December 2019. Now that large business UPI payments are no longer legally protected, there's a possibility of an MDR-like fee on certain large transactions.
Will a fee be charged on payments over ₹2,000?
No decision has been made on this yet. The government has stated that if a fee is charged, it will apply to select business transactions above a certain limit. It has also been said that person-to-person UPI transfers will remain completely free. So, it would be incorrect to say that a fee will be charged on a ₹2,001 UPI transaction from tomorrow.
Why did the government make this change?
The government's argument is that there are ongoing costs to operate the UPI system, maintain its security, and innovate new technology. In response to a question from Congress leader Jairam Ramesh on 6th August, Finance Minister Nirmala Sitharaman stated that MDR is levied on merchants, not customers. According to the government, this could help banks and fintech companies invest more in UPI's infrastructure, security, and new tech.
How big is the UPI business?
NPCI manages UPI, and it has become the country's largest digital payment medium. In August 2026, about 24.51 billion transactions were completed via UPI. The total value of these transactions was around ₹29.82 lakh crore. About three-fourths of these transactions were done through Google Pay and Walmart's PhonePe. This means the volume of UPI payments is so high that even a small fee on large business transactions could be a significant revenue source for the payment industry.
How much could the fee be?
No final rate has been set yet. Industry experts estimate the fee could be between 25 and 40 basis points. In August, there were reports that a 0.3% fee for transactions of ₹2,000 or more was being considered. However, this cannot be considered a fixed fee at the moment.
What is unclear in the notification?
According to an August estimate by brokerage firm Jefferies, introducing a fee on large-scale UPI transactions could generate revenue of about ₹5,000 crore to ₹10,000 crore per year for the payment industry. No decision has been made on whether a fee will be imposed, and if so, what its structure will be. The final decision on this will be taken by the UPI & Services Steering Committee, led by NPCI. This means it's incorrect to see the government's new notification as the start of fees. It just lays the legal groundwork for setting fees in the future.
What is the impact on the common person?
Some things in the new notification are still unclear. No date has been mentioned for when it will come into effect. It doesn't directly cancel the old 2019 notification. Also, the new notification doesn't separately mention person-to-person and person-to-merchant UPI payments. The 2019 notification had a separate name for BHIM UPI QR code, but this time it's missing. For now, there is no change in how you use UPI. Whether you pay ₹50 at a tea stall, ₹1500 for groceries, or send ₹5000 to someone, there is no new fee for UPI. Even if you make a UPI payment of more than ₹2000, money will not be deducted from your account because of this notification. Payments made with a RuPay debit card will remain free as before.
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