Government Plans to Amend Payment Laws, May Allow Charges on High-Value UPI Payments

The Ministry of Finance has tabled an amendment to the Payment and Settlement Systems Act that could give the government flexibility to levy fees on merchants for UPI transactions exceeding Rs 2,000. The proposal aims to create a legal pathway for future charges while keeping everyday UPI transfers free of cost.

According to the draft, more than 90 percent of transactions involving groceries, dairy, vegetables and other routine purchases would remain outside the scope of any possible MDR, protecting the daily spending of the average consumer. Presently, MDR is applicable only to card‑based payments, and most merchants absorb that cost rather than passing it on.

If enacted, the amendment would replace the current zero‑fee clause with broader provisions, allowing the government to issue notifications on fees for various digital payment methods. The RBI and the finance ministry have both stressed that any change will be driven by the need to sustain the digital payment ecosystem, not to increase the financial load on users.