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There is good news for the general public and small businesses. The Finance Ministry issued an official notification on Monday clarifying that no bank or system provider can directly or indirectly impose any charges up to ₹2,000 on UPI transactions and RuPay debit card payments.

What does the government notification say?

As per this government order, no additional fee will be levied on anyone making or receiving electronic payments up to ₹2,000. The decision comes amid speculation that ordinary users will also face digital payment charges following recent legal changes.
Clarifying the situation, the Finance Ministry said that the Taxation and Other Laws Bill, 2026, recently passed by Parliament, is not meant to burden the common man, but to enhance the technical robustness and security of the UPI ecosystem.

Large merchants may be charged MDR

A recent amendment amended Section 10A of the Payment and Settlement System Act, 2007, removing the tax exemption granted to large merchants (such as Amazon, Flipkart, etc.) with a turnover of over Rs 50 crore. This change has paved the way for imposition of merchant discount rate on large merchants.
According to reports, person-to-merchant (P2M) UPI transactions worth more than Rs 2,000 may be charged around 0.4 percent MDR.

Increase the number of UPIs

The figures for the year 2025-26 show the volume of digital payments in the country.

Total Transactions: Over 24,000 crore UPI transactions worth ₹314 lakh crore were recorded during FY 2025-26.

Payments above ₹2,000: Transactions above ₹2,000 accounted for only 4 percent of P2M UPI payments by number, but this 4 percent by value accounted for nearly two-thirds of total UPI transactions.

Financial balance of digital infrastructure

Banks and payments companies have long complained about the ever-increasing cost of maintaining digital infrastructure. The Department of Financial Services told a Parliamentary Standing Committee that the payments industry is incurring an annual cost of ₹20,700 crore for P2M transactions. In March, the Standing Committee on Finance also acknowledged that the lack of MDR is making the ecosystem financially unsustainable.

Government Incentive SchemeTo provide financial compensation to small traders and banks, the government is running an incentive scheme under which a maximum of 0.15 percent of the transaction value is given as subsidy.

Subsidy announced in 2024-25: ₹1,922.77 crore

Subsidy issued in 2025-26: ₹2,196.21 crore

Budget Estimates for 2026-27: ₹2,000 crore
The move clearly shows that the government is working on a policy to offset the rising costs of digital infrastructure by large business transactions, while keeping digital payments completely free for ordinary citizens and small merchants.