Finance Ministry notification protects small-value UPI transactions from direct and indirect charges; around 96% of UPI transactions by volume fall within the threshold
New Delhi, September 15, 2026: The Central Government has notified that Unified Payments Interface (UPI) transactions of up to ₹2,000 cannot attract any direct or indirect charge from banks or system providers.
The notification, issued by the Department of Financial Services under the Ministry of Finance, effectively keeps the vast majority of UPI transactions within a zero-charge threshold. According to industry data cited in the report, around 96% of UPI transactions by volume fall within the ₹0–₹2,000 band.
Government Specifies Zero-Charge Electronic Payments
In a Gazette notification dated September 14, the Department of Financial Services specified two electronic payment modes covered by the provision:
- Debit Card powered by RuPay
- UPI transactions up to ₹2,000
The notification makes it clear that banks and system providers cannot impose charges, either directly or indirectly, on a person making or receiving a payment through the specified electronic modes.
The measure has been notified under Section 10A of the Payment and Settlement Systems Act, 2007.
96% of UPI Transactions Fall Within the ₹2,000 Band
The ₹2,000 threshold is significant because of the way Indians use UPI for everyday digital payments.
Industry estimates indicate that approximately 96% of UPI transactions by volume are valued at ₹2,000 or below. This means the overwhelming majority of transactions remain within the range specifically protected from charges under the government notification.
In the person-to-merchant (P2M) segment, estimates similarly suggest that only around 4% of transactions exceed ₹2,000, leaving roughly 96% within the protected band.
No MDR Framework Announced for UPI Above ₹2,000
The notification does not introduce or specify a Merchant Discount Rate (MDR) for UPI transactions exceeding ₹2,000.
Instead, its operative provision is focused on preventing banks and system providers from imposing direct or indirect charges on UPI payments of up to ₹2,000.
Therefore, the notification should not be interpreted as introducing a new charging structure for UPI transactions above ₹2,000.
UPI Continues to Drive India’s Digital Payments Growth
The latest notification comes as UPI continues to operate at an enormous scale across India.
According to data from the National Payments Corporation of India (NPCI) cited in the report, UPI processed more than 24,500 million transactions in August 2026, with the total transaction value reaching nearly ₹29.82 lakh crore.
The figures underline the central role UPI has come to play in India’s rapidly expanding digital payments ecosystem.
What the New Notification Means for Users
For consumers, the notification provides greater clarity that UPI transactions of up to ₹2,000 remain protected from direct or indirect charges by banks and system providers.
With the majority of UPI transactions falling within this value range, the move is expected to maintain the cost-free nature of small-value digital payments and support continued adoption of UPI for everyday transactions.
The notification, however, does not establish a new MDR or charging mechanism for UPI payments above ₹2,000.
