UPI News India: ₹2,000 Fee Exemption, Record August Volumes & More

The Unified Payments Interface (UPI) has been in the news on multiple fronts this September — a new government notification on transaction charges, record monthly volumes released by NPCI, a brief service disruption from SBI, and continuing questions around merchant discount rates (MDR). Here is a full, detailed roundup of the latest UPI news out of India.

Government Notification: No Charges on UPI Payments Up to ₹2,000-

On September 14, 2026, the Finance Ministry's Department of Financial Services issued Gazette Notification S.O. 5067(E) under Section 10A of the Payment and Settlement Systems Act, 2007. The notification formally protects two specified payment modes from any direct or indirect charge by banks or payment system providers:

• Unified Payments Interface (UPI) transactions up to ₹2,000
• Debit card transactions powered by RuPay

The notification states plainly that banks and system providers cannot charge users for making or receiving payments through UPI or RuPay debit cards, as long as the UPI transaction amount stays within the ₹2,000 limit.

What about transactions above ₹2,000? The Gazette notification only protects UPI transactions up to ₹2,000 from charges — it does not state that a new fee automatically applies above that threshold. The government has not announced any new consumer charge simply because a UPI transaction crosses ₹2,000. It is also important to note the notification lists "Debit Card powered by RuPay" and "UPI transactions up to Rs. 2,000" as two separate categories — RuPay debit card protection is not itself capped at ₹2,000, while the UPI protection specifically is.

India's UPI ecosystem has grown into one of the world's largest digital payment networks, and maintaining that scale requires banks, payment companies, and other ecosystem participants to continue investing in technology, cybersecurity, fraud prevention, servers, and transaction processing. The government has so far supported the ecosystem through incentive schemes rather than allowing merchant discount rate (MDR) charges on qualifying transactions.

MDR Debate Resurfaces-

In August 2026, discussions around merchant discount rate (MDR) on UPI resurfaced after the government proposed changes to the Payment and Settlement Systems Act, 2007. MDR is the fee merchants pay to banks and payment processors for handling digital transactions — currently zero for UPI transactions in India, unlike in most other countries where digital payment processing carries some cost to merchants. The September 14 gazette notification, which explicitly protects small-value UPI and RuPay transactions from charges, comes directly against this backdrop of renewed MDR discussion.

UPI Hits Record 24.51 Billion Transactions in August 2026-

Separately, data released by the National Payments Corporation of India (NPCI) on September 1 showed UPI processed a record 24.51 billion transactions in August 2026 — its highest-ever monthly volume. The transactions were worth ₹29.82 lakh crore.

• Month-on-month: Volume rose 3.6% from July's 23.66 billion transactions.
• Year-on-year: Volume increased 22% from 19.63 billion transactions in August 2025; value rose 20% from ₹24.85 lakh crore in August 2025.
• Average daily volume: Rose to 791 million transactions in August, up from 763 million in July.
• Transaction value trend: August's ₹29.82 lakh crore came in just below the all-time high of ₹29.90 lakh crore, recorded in both May and July 2026 — suggesting August's growth came more from a rise in transaction count than from bigger-ticket payments.

August marked the second consecutive month of record UPI transaction volumes, following July's previous high of 23.66 billion. NPCI attributed part of the growth to festive activity, including Raksha Bandhan, which boosted everyday peer-to-peer transfers and small-ticket gifting.

Industry executives linked the numbers to UPI's deepening use in everyday, low-value transactions. NPST co-founder and CEO Deepak Chand Thakur said that ticket sizes coming down even as volumes rise indicates the growth is organic and widely distributed, rather than concentrated in a few pockets. Kiwi co-founder and COO Siddharth Mehta said the platform's next phase of growth would be defined less by raw volumes and more by the broader financial experiences it enables for consumers. Cashfree Payments co-founder Reeju Datta noted the upcoming festive season could provide a further growth opportunity for digital payments.

The Bigger Growth Story: A Decade of UPI-

UPI was launched on August 25, 2016. Since then, its growth has been described by NPCI as one of the most significant shifts in India's digital payments landscape:

• Annual UPI transaction volume climbed from 1.78 crore in 2016-17 to more than 24,162 crore in 2025-26 — an almost 13,000-fold increase.
• Annual UPI transaction value rose from ₹0.07 lakh crore in FY17 to around ₹314 lakh crore in FY26.
• 2026 marked a fresh milestone, with monthly transaction volumes crossing 2,300 crore for the first time in May 2026.
• UPI is now accepted in 11 countries: Uzbekistan, Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece.

Market Share: Who's Winning the UPI App War-

As of the most recent app-wise data available (July 2026), the UPI ecosystem remains dominated by three major players:

• PhonePe (Walmart-backed) — 10.86 billion transactions, 45.89% of total UPI transaction volume
• Google Pay — 7.65 billion transactions, 32.33% of total UPI transaction volume
• Paytm — 1.90 billion transactions, 8.05% of total UPI transaction volume

NPCI had not released app-wise transaction data for August at the time of the latest overall volume report.

SBI Reports Brief UPI Service Disruption-

Separately, the State Bank of India (SBI) notified customers of a scheduled disruption to UPI services lasting approximately one hour on Friday, September 4, 2026, attributed to technical maintenance work. Users were advised in advance to avoid relying on SBI-linked UPI services during the announced maintenance window.

What This Means Going Forward-

Small transactions stay free. The September 14 notification gives legal backing to the existing practice of not charging users for UPI payments up to ₹2,000 and RuPay debit card transactions, closing off any ambiguity following the MDR discussions that resurfaced in August.

Volume growth shows no sign of slowing. Two consecutive months of record transaction volumes, combined with NPCI's earlier CEO commentary projecting annual transactions in the 40-42 billion range for the year, point to continued expansion through the remainder of 2026, particularly with the festive season (October-November) still ahead.

The MDR question remains open. While the government has protected small-value transactions from charges for now, the broader debate over whether and how merchant discount rates might eventually apply to larger UPI transactions has not been resolved, and industry stakeholders continue to flag the cost of maintaining UPI's infrastructure at scale.

Quick Reference: Key UPI Developments This Month-

This is a developing story. Figures and policy details are based on official NPCI and Finance Ministry data and notifications as of September 15, 2026, and may be updated as further clarifications are issued.