Will UPI transactions over ₹2,000 soon attract merchant fee?

Unified Payments Interface (UPI) payments above ₹2,000 may soon attract a merchant fee as the government has introduced a new bill in the parliament to amend the the Payment and Settlement Systems Act, 2007, according to multiple news reports.

Section 10A of the 2007 Act at present prevents banks from imposing any charge on a person making or receiving a payment through electronic modes of payment like UPI.

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman on Tuesday introduced The Taxation and Other Laws (Amendment) Bill, 2026 (Bill No. 150 of 2026) in the Lok Sabha to make key amendments across  Payment and Settlement Systems Act, 2007, the Income Tax Act, 2025, and the Finance Act, 2026.

Under Clause 2 of the Bill, the government seeks to amend Section 10A of the Payment and Settlement Systems Act, 2007 to allow levy of charges on certain electronic modes of payment that the government may specify in a notification.

Media reports state that the proposed provision lays the legal groundwork for reintroducing a Merchant Discount Rate (MDR) on high-value UPI transactions. Since January 2020, there had been no MDR on RuPay debit cards and UPI transactions.

Government is likely to allow a levy of 0.25% to 0.4% as merchant discount rate (MDR) or charges on UPI payments above Rs 2,000 made to businesses, while keeping payments made by one person to another outside the ambit, the Times of India reported.

The Indian Express said the proposed amendment effectively sets the ground for UPI and RuPay debit card payments to large merchants such as Amazon and Flipkart to attract an MDR fee.

However, the Reuters reported that a decision has not yet been made on the level of fees or where they would apply.