‘They called it a gift, then I sat with the gazette’: Prakash Raj on UPI fee

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I keep getting the same forward. ‘The government has saved you. UPI till ₹2,000 is free. Sleep well.’

Before the slogans start, I want a simple answer. On an ordinary day, how much do you actually scan (to pay)? For tea? An auto? The vegetables? Or the school fee, the hospital bill, the petrol that never stays under ₹2,000 once you fill the tank?

The gift is real. The cut-off is also real. Both can be true at the same time. That is what they are counting on. You will remember only the first sentence.

On September 14, the Finance Ministry issued Gazette S.O. 5067(E) . (I am writing the number here so nobody tells me later that I imagined it.) Under Section 10A of the Payment and Settlement Systems Act, two things stay free: RuPay debit-card payments of any amount and UPI up to ₹2,000. Banks cannot charge the person sending or the person receiving on those two.

The next day, NPCI (National Payments Corporation of India) put out the rest. From October 15, if you pay a merchant more than ₹2,000 on UPI, the shop pays a 0.4% fee. On ₹3,000 it is ₹12. On ₹50,000, it is ₹200. After ₹75,000 they cap it at ₹300, so even a payment of ₹1 lakh costs the merchant ₹300, not ₹400.

Money sent to your brother remains free. Even a lakh sent to a friend remains free (because transfers between people, which are about 70% of total UPI value, will stay free at every amount). Small vendors who take under a lakh a month on a QR code, if they are tagged correctly as P2PM (person to person merchant), also stay out. Rail, petrol, insurance, telecom and farm inputs get a flat ₹5 if the ticket is above ₹2,000. Mutual funds and the capital-market crowd get 0.02%.

Your app will not cut 0.4% from your account. They have said that many times. I believe the circular. But I do not believe the shopkeeper will swallow ₹12 with a smile every time someone pays for the groceries.

In August, UPI processed 24.51 billion transactions. That is NPCI’s number. The value was ₹29.82 lakh crore. For the full year of 2025-26, it was 24,162 crore transactions and ₹314 lakh crore. Here is the line that sounds good on television. More than 95% of merchant tickets are ₹2,000 or less. Only about 4% of merchant tickets sit above ₹2,000, but those tickets carry about two-thirds of merchant value.

They protected the number of scans, and opened the value. Milk, a cutting chai , an auto fare stay free. A sack from the mandi , a quarterly school fee, a hospital bill, a month’s petrol, that crosses ₹2,000: that is where the meter sits.

In August, Reuters and India Today used a rougher cut: about 5% of transactions and 65% of value. That was the proposal stage. After September, NPCI spoke only of person-to merchant payments. I am keeping both figures so nobody says the numbers were moved in the dark.

On November 8, 2016, at 8 p.m., 86% of the cash in circulation in India was declared scrap. After that night, the wallet left the pocket — slowly. In 2019, Section 10A arrived. On this track, a bank would not take even one extra rupee from you.