NEW DELHI: UPI payments above Rs 2,000 could attract charges in the future, while transactions up to the specified limit will continue to remain free for users. The government has directed banks and payment service providers not to charge customers for transactions made through UPI or RuPay debit cards up to Rs 2,000.
The move gives a statutory basis to keep digital payments free for users within the specified transaction limit.
Will UPI Payments Above Rs 2,000 Attract Charges?
Under the new framework, UPI transactions above Rs 2,000 may attract a Merchant Discount Rate (MDR). MDR is a fee charged by banks or payment service providers to merchants for processing digital payments.
However, the government has not yet announced the final MDR rate for such transactions.
According to sources, the rate could be in the range of 0.25% to 0.4% of the transaction value. The final rate and the transactions on which it will apply are expected to be clarified by the government.
UPI Payments Up to Rs 2,000 Will Remain Free
For customers, UPI payments up to Rs 2,000 will continue to remain free under the new arrangement. The same applies to payments made through RuPay debit cards within the specified limit.
The government has also indicated that any MDR introduced for higher-value transactions would be limited to certain merchant payments. The proposed rate is expected to be nominal and significantly lower than the MDR generally associated with debit and credit card transactions.
What About UPI Person-to-Person Payments?
Person-to-Person (P2P) UPI transactions will continue to be free.
This means users transferring money directly to another person through UPI will not have to pay a transaction fee. The proposed MDR would primarily concern eligible merchant transactions above the specified threshold.
What Does This Mean for UPI Users?
For most everyday UPI users, there may be little immediate impact. Small payments within the Rs 2,000 limit will continue to be free.
However, people making higher-value payments to merchants may need to check whether a fee applies once the government announces the final MDR structure. The actual impact will depend on the transaction type, merchant category and final rules.
UPI Charges Above Rs 2,000: Key Points
| Transaction Type | Proposed Status |
|---|---|
| UPI payment up to Rs 2,000 | No customer charge |
| RuPay debit card payment up to Rs 2,000 | No customer charge |
| UPI merchant payment above Rs 2,000 | MDR may apply |
| Person-to-person UPI payment | Remains free |
| Proposed MDR | Around 0.25% to 0.4%, according to sources |
The key point is that UPI will not suddenly become a paid service for all transactions. The proposed changes are focused on certain merchant transactions above Rs 2,000, while P2P payments and transactions within the specified limit will remain free.
