On Monday, September 14, 2026, India notified changes to the Payment
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Digital Public Infrastructure and financial inclusion: a key GS3 topic regarding transaction costs.
Why in news
The Government of India notified amendments to the Payment and Settlement Act, 2007, prohibiting banks from charging for UPI transactions up to ₹2,000 and RuPay debit card payments.
Background
The notification specifies that no bank or system provider can impose direct or indirect charges on UPI transactions up to ₹2,000 or RuPay-powered debit card payments. The amendment alters previous provisions to allow for the potential imposition of charges on larger transfers, which are currently pending final decision.
Facts for Prelims
- Act / BillPayment and Settlement Act, 2007
- FactUPI transactions up to ₹2,000 are exempt from bank charges
- FactRuPay-powered debit card payments are exempt from bank charges
- BodyUnified Payments Interface (UPI) is a designated electronic mode of payment
Prelims practice question
With reference to the notification regarding transaction charges in India, consider the following statements:
- The government has already finalized the fee structure for transactions exceeding ₹2,000.
- RuPay-powered debit card payments are exempt from bank charges.
- Banks are prohibited from charging for UPI transactions up to ₹2,000.
Which of the statements given above is/are correct?
- (a)2 only
- (b)3 only
- (c)1 and 3 only
- (d)2 and 3 only
Show answer
Answer: (d) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The government has yet to decide on the fee structure for transactions exceeding this limit.
For Mains
Q. Discuss the implications of regulating transaction fees on digital payment systems like UPI for financial inclusion and the growth of the digital economy in India.
Dimensions to cover in your answer
- Monetary policy friction: Balancing the cost of maintaining digital infrastructure with the goal of zero-cost retail payments
- Financial inclusion: Ensuring low-value transactions remain free to encourage rural and low-income demographic participation
- Revenue model uncertainty: Determining sustainable fee structures for high-value transfers without deterring digital adoption
Keywords: Financial Inclusion · Digital Infrastructure · Payment Settlement · Monetary Policy · Retail Payments
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