NPCI's big announcement regarding UPI payment, charge will be levied on merchant transactions above Rs 2000

National Payments Corporations of India (NPCI) has made a big announcement regarding UPI payments.

Now a fee of 0.4% will be charged on Persons to Merchant (P2M) UPI payments above Rs 2000 and it will not exceed Rs 300.

However, imposition of such charges on UPI payments will not have any impact on common consumers.

NPCI has informed that while keeping UPI completely free for consumers, a revised UPI Merchant Discount Rate (MDR) framework has been introduced on select merchant transactions, which will be applicable from October 15, 2026.

NPCI said in the statement that under this framework, 95% of UPI transactions with value less than Rs 2,000 and small merchant transactions (P2PM) have been kept completely free, and a new fund has been proposed to support the expansion of UPI acceptance among small merchants.

Recently, a concern had arisen in the minds of millions of people using UPI payment.

Actually, after a notification from the Central Government, its discussion was going on in full swing on social media also.

While issuing the notification, the government had said, "Banks cannot levy any fee on Unified Payments Interface (UPI) transactions up to Rs 2,000. In the Gazette notification issued by the government, there is a ban on levying any fee on RuPay debit card payments up to Rs 2,000."

According to the notification, "No bank or system provider can charge any fee directly or indirectly from the person making or receiving payment through these means."

The government has issued this notification under Section 10A of the Payment and Settlement Systems Act, 2007.

The biggest question among people using social media and UPI is why the limit of Rs 2000 is mentioned in the government notification?

Till now, no transaction charge was taken from the user for making any payment through UPI.

In such a situation, people are asking whether the new notification means that the government has opened the way to impose charges on UPI payments of more than Rs 2000 in future?

This apprehension is not completely baseless, because in the new notification, UPI transactions up to Rs 2000 have been clearly kept in the no-charge category. But this does not mean that any charge has been imposed on UPI payments above this amount. The government has not said anything clearly about this.

Congress has accused the Modi government at the Center of preparing to extort money from the public through UPI payment.

The party has claimed that the government is planning to impose a charge of 0.5 percent on every UPI payment above Rs 2,000.

In fact, according to the government notification issued on September 14, 2026, there will be no charge on UPI payments up to Rs 2,000.

Congress says that if this system is implemented then an additional charge of Rs 25 will have to be paid on UPI payment of Rs 5,000.

Congress wrote on Twitter, "Narendra Modi has brought a new plan to collect money from the public. Now the government will collect on UPI payments above Rs 2,000. The plan is that 0.5% charge will be levied on every UPI payment above Rs 2,000. This means that if you make a purchase of Rs 5,000, then a charge of Rs 25 will be levied. If you make a purchase of Rs 10,000, Rs 50 will be charged."

BJP has termed Congress's allegations as wrong. BJP spokesperson Pradeep Bhandari wrote on Twitter, "Congress is once again spreading fake news."

As of now, no transaction charge is being charged for making payments from UPI users.

The government had also said in August 2026 that no charges will be levied on UPI payments for general users and P2P (person to person) transactions will remain free.

The government had also said that if MDR i.e. Merchant Discount Rate is introduced in future, it will be applicable on a limited number of merchant transactions.

It is important to understand an important difference from this.

MDR and user charges are not the same thing.

MDR is the fee that is paid by the merchant to the bank and other payment service providers in the payment system. This does not mean that every time the customer makes payment through UPI, the same amount will be recovered.

The government had clearly said in August that transaction charges will not be imposed on UPI users and P2P payments will remain free.

The government's new notification currently puts UPI payments up to Rs 2000 directly under the no-charge provision. But no rate has been fixed in this notification as to how much fee will be charged on UPI payments above this amount, when it will be charged or whether it will be charged or not.

That is, it would not be correct to say right now that charges have started on UPI payments of more than Rs 2000.

But the question is definitely open whether a system of MDR or any other fee will be made on large merchant transactions in future or not.