Banks' panel to decide on UPI merchant charges on transactions above ₹2,000
A panel comprising representatives of banks, service providers and various associations would soon take a call on charges to be levied on UPI payments above Rs 2,000 to merchants.
The government has decided not to charge banks or payment providers for Unified Payments Interface (UPI) transactions up to Rs 2,000. This directive, issued in a gazette notification dated September 14, applies to payments made through UPI and RuPay debit cards. The government's decision stems from an amendment to section 10A of the Payment and Settlement Systems Act, 2007, which enables the imposition of merchant discount rates (MDR) on electronic payments.
However, the government has not specified whether charges will apply to transactions exceeding Rs 2,000 paid by merchants. UPI, operated by the National Payments Corporation of India (NPCI), has witnessed an exponential surge in transaction value, growing from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, a remarkable 4,000-fold increase over the decade.
The government's rationale behind imposing charges is twofold: to fund continuous upgrades in cybersecurity, fraud prevention, and infrastructure, and to create a self-sustaining revenue model for market expansion and ensuring future growth.
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