Government allocates 2000 Cr For UPI, while above payment of 2000 you need to know these details
vrushangshah93@gmail.com UPI, which is India’s dominant digital payment infrastructure, has reached over 500 million unique users, and the government sees further room for growth in UPI payment.
In the budget 2026, Nirmala Sitharaman announced a Rs 2,000 crore allocation for incentive schemes promoting RuPay debit cards and low-value BHIM-UPI person-to-merchant transactions in the Union Budget 2026-27.
The government just set aside ₹2,000 crore in the new budget to encourage small-value UPI payments and RuPay debit card use.
That’s actually a bit less than last year’s revised amount, even though UPI is booming like never before.
The allocation represents a significant increase from the Rs 437 crore initially budgeted for UPI incentives last year, which was later raised to over Rs 2,000 crore following inputs from the Payments Council of India.
The incentives have become crucial for digital payment companies as UPI and RuPay debit card transactions currently operate under a zero merchant discount rate regime, meaning merchants pay no fees for accepting these payments.
However, the digital payments promotion outlay did not impress the industry.
“With zero MDR for UPI and the government allocating a mere Rs 2,000 crore for processing, 30 crore transactions every day for free will choke the entire ecosystem for funds for scaling and growth. We were expecting the government incentive to be above Rs 10,000 crore,” Vishwas Patel, Chairman of industry body Payments Council of India, said in a statement.
“With increasing deployment and servicing costs as well as increasing RBI compliance costs, it will choke the growth. We don’t want to survive on government incentives. The only solution is for the government to allow us to charge a low-controlled MDR of 30 BPS on UPI P2M transactions only for merchants with more than Rs. 20 lakh in turnover. The incentives can continue for smaller merchants by offering them zero MDR. UPI P2P can continue to be zero charges,” Patel added.
“With these kinds of incentives for the fintech industry, it will be very difficult to get the next set of 300 million Indians on the digital payments bandwagon as well as deploy acceptance mechanisms in the hinterland of our country,” Patel’s statement said.
New Rules if you spent more than 2000 with UPI:
UPI has emerged as the primary method for many individuals in India to make payments, ranging from grocery purchases to business transactions.
With the rise in usage, concerns regarding fraud, limits, and system strain have also intensified.
To address this, the RBI and NPCI have implemented a set of new UPI regulations, with some currently in force and others set to be effective in 2026.
New Rules For UPI Payments:
- Starting in April 2026, UPI transactions will need to implement two-factor authentication that includes a minimum of one dynamic security measure.
- Daily UPI limits generally remain ₹1 lakh, with higher limits available only for select categories.
- Routine UPI payments stay simple, with extra checks mainly for high-value or risky transactions.
Mandatory Two-Factor Authentication For Digital Payments (From 1 April 2026)
The rule targets fraud linked to static credentials like UPI PINs and SMS OTPs. SMS OTP remains allowed but not alone. Banks and UPI apps must comply with UPI by adding biometrics, secure in-app approvals, and extra checks for high-risk payments.
Extra Security For Big Transfers
The most noticeable change is mandatory two-factor authentication for payments above ₹2,000. Instead of just entering your UPI PIN, you’ll need an additional verification step—like an OTP, biometric scan, or device-based confirmation. This ensures that even if your phone or UPI ID is compromised, fraudsters cannot easily siphon off large sums.
Smaller payments remain quick and seamless, but bigger transfers now come with added peace of mind.
QR Codes Get Smarter
Merchants will now need GST-linked QR codes for compliance.
Businesses with turnover above ₹40 lakh must adopt these codes, while those above ₹20 lakh are also included.
Focus On Transparency And Compliance
The new rules also emphasize transaction transparency.
Payments above ₹2,000 will generate detailed digital receipts, linked to GST compliance for businesses. This reduces tax evasion and strengthens India’s financial ecosystem.
This rule is basically meant for the safety of the customers as nowadays digital fraud is not a new thing and for the safety of customers, it is quite needed.
Disclaimer: This article is for informational purposes only. Rules may change, and readers should verify official updates before making financial decisions or relying on UPI guidelines.
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