New guidance from the Finance Ministry confirms that UPI transfers up to ₹2,000 will continue to be free of charge, a move that preserves the widespread use of small-value payments across the country. The decision covers about 96% of all UPI transactions by volume.
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Proposed charges on larger merchant payments
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For larger payments made to merchants (P2M), regulators are considering a variable levy of around 0.4% of the transaction value. If approved, banks would receive roughly 40% of the collected charges as their share.
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Peer-to-peer transfers
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Transfers between individuals (P2P) are slated to remain free, with no value-based fee introduced.
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What this means for users and merchants
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- Small, everyday UPI payments up to ₹2,000 should remain cost-free.
- The new potential charge would primarily affect higher-value P2M transactions, not consumer-to-consumer transfers.
- Banking and payment partners would secure a portion of the fee, potentially influencing settlement economics for merchants.
- P2P transactions will stay free regardless of amount.
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Next steps
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The Finance Ministry has issued the policy outline and regulators are finalizing the framework. A timeline for implementation has not been disclosed, and the proposal remains subject to formal notification and industry consultation.
