Government eliminates bank charges on small UPI and RuPay transfers

The government has notified amendments to the Payment and Settlement Act, 2007, that prohibit banks from charging fees on digital payments made through Unified Payments Interface (UPI) and RuPay debit cards for transactions not exceeding ₹2,000.

The regulatory change effectively eliminates a financial barrier for consumers conducting small-value digital transactions, aligning with India's broader push toward a cashless economy. By removing transaction charges on these commonly used payment channels, the government seeks to encourage greater adoption of digital payment methods across the country.

UPI has emerged as one of India's most popular payment platforms, processing millions of transactions daily across various sectors. RuPay, the domestic card network, has similarly gained traction as a cost-effective alternative to international card schemes. The fee waiver on both platforms for transactions up to ₹2,000 is expected to reduce friction in everyday digital transactions for individuals and small businesses.

The amended regulations place an additional burden on banks to absorb transaction processing costs for these smaller payments. Financial institutions will need to adjust their operational models to accommodate the fee restrictions while maintaining service quality. The move reflects the government's commitment to reducing costs associated with digital financial inclusion across Indian consumers.