The Central Government announced on Monday that banks cannot levy any charges on Unified Payments Interface (UPI) transactions of up to ₹2,000 or on payments made using RuPay-powered debit cards.

A government gazette notification designated RuPay-powered debit cards and UPI transactions up to ₹2,000 as electronic modes of payment. It further stated that no bank or system provider may impose any direct or indirect charges on the person making or receiving payments through these methods.

The Ministry of Finance introduced these changes under the Payment and Settlement Systems Act to clarify regulations regarding charges on UPI transactions. The notification specifically classified RuPay-powered debit cards and UPI transactions up to ₹2,000 as "electronic modes of payment."

In an official notification, the Ministry of Finance stated that, in exercise of the powers conferred by Section 10A of the Payment and Settlement Systems Act, 2007 (51 of 2007), the Central Government prescribes the following electronic modes of payment:

(i) RuPay-powered debit cards

(ii) Unified Payments Interface (UPI) transactions up to ₹2,000. No bank or system provider shall impose any charge, either directly or indirectly, on the person making or receiving payments using the aforementioned electronic modes.

Finance Minister Nirmala Sitharaman had stated last month that the Merchant Discount Rate (MDR) on digital transactions applies to merchants, not customers, and that MDR charges would help banks and fintech companies invest more in infrastructure and security.

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