UPI Transactions and RuPay Debit Cards: Government Directive
The government has issued a directive preventing banks and payment system providers from levying charges on Unified Payments Interface (UPI) transactions and payments made using RuPay debit cards up to ₹2,000.
Key Points from Government Notification
- The directive applies to transactions up to ₹2,000, ensuring no direct or indirect charges are imposed on such transactions.
- The government has not clarified if charges are applicable for transactions exceeding ₹2,000, which may affect merchants.
Legal and Regulatory Framework
- The directive follows an amendment to section 10 A of the Payment and Settlement Systems Act, 2007.
- This act provides the framework for imposing a Merchant Discount Rate (MDR) on UPI and other electronic payment methods.
- The Amendment Bill was passed during the Monsoon Session of Parliament, concluding on August 13, 2026.
Rationale and Future Outlook
- The directive aims to ensure UPI's infrastructure is upgraded to handle increasing transaction volumes.
- Charges intend to foster market expansion and create a self-sustaining revenue model.
- Reliance solely on subsidies is deemed unsustainable for future growth.
UPI's Growth and International Presence
- National Payments Corporation of India (NPCI) operates UPI, initiated by the Reserve Bank of India (RBI) and the Indian Banks’ Association.
- UPI facilitates real-time payments between individuals and merchants.
- Internationally, UPI is accepted in 11 countries, including Singapore, UAE, France, Mauritius, and more, with Uzbekistan being the latest.
- Since its launch on August 25, 2016, UPI has significantly transformed India's digital payments, with transaction values increasing from ₹0.07 lakh crore in FY17 to approximately ₹314 lakh crore in FY26.
