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A Ministry of Finance gazette notification dated 14 September 2026 bars banks and payment system providers from charging anything on UPI transactions up to Rs 2,000 and on RuPay debit card payments.
No charge may be imposed, directly or indirectly, on either the person making or the person receiving such a payment.
The notification is issued under Section 10A of the Payment and Settlement Systems Act, 2007, which the Taxation and Other Laws (Amendment) Act, 2026 rewrote during the Monsoon Session.
The RuPay debit card exemption carries no upper limit; the Rs 2,000 ceiling applies to UPI alone.
UPI set a record in August 2026 with 24.51 billion transactions worth Rs 29.82 lakh crore.
The provision under which the Centre specifies electronic payment modes on which no bank or system provider may levy a charge. The notification of 14 September 2026 was issued under it.
Inserted Section 10A into the 2007 Act, creating the zero-MDR regime that took effect on 1 January 2020 and made UPI and RuPay debit card payments free to use.
Passed in the 2026 Monsoon Session and cleared by the Lok Sabha on 6 August 2026. It replaced the blanket statutory bar on charges with an enabling framework under which the government notifies, by executive order, which modes remain charge-free.
Umbrella organisation for retail payments in India; operates UPI, RuPay, IMPS, NACH, BHIM and FASTag. Set up in 2008 by the RBI along with the Indian Banks' Association as a not-for-profit company.
Regulator and supervisor of payment systems under the Payment and Settlement Systems Act, 2007; authorises payment system operators
The department that handles banking and digital payments policy, through which the charge-free modes were specified
General Awareness > Banking and Financial Awareness > Payment systems
GS Paper III > Indian Economy > Banking, digital payments and financial inclusion
General Awareness > Economy and current affairs
Consider the following statements: 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct?
Answer: Both 1 and 2
Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'?
Answer: Mobile wallets will not be necessary for online payments.
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news?
Answer: The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
With reference to digital payments, consider the following statements: 1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account. 2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication. Which of the statements given above is/are correct?
Answer: 1 only
The fee a merchant pays to the acquiring bank or payment service provider for processing a card or digital payment, usually a percentage of the transaction value, shared among the acquirer, the network and the issuing bank.
The provision empowering the Central Government to specify electronic payment modes on which no bank or system provider may impose a charge on the payer or the payee.
Person-to-person transfers between individuals, and person-to-merchant payments. MDR arises only on the merchant side; P2P transfers have always been free.
National Payments Corporation of India, the 2008 umbrella body for retail payments set up by the RBI and the Indian Banks' Association, which operates UPI and RuPay.