Did government order banks to stock ATMs ahead of UPI charges? Here’s what PIB said

The government on Wednesday said claims that banks across India had been instructed to stock ATMs with additional cash ahead of the rollout of UPI fees are false. The clarification came after a LiveMint newspaper clipping carrying the headline "Banks asked to stock up ATMs ahead of UPI fees" circulated online, with PIB Fact Check stating that neither the Reserve Bank of India (RBI) nor the Finance Ministry had issued such instructions.

The circulating clipping claimed that preparations had been sought for higher cash demand because charges were being introduced on certain UPI transactions. PIB Fact Check marked the headline as fake and urged people to report suspicious content related to the Central Government through its fact-checking service.

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What the viral ATM claim said

The claim emerged amid changes to the UPI framework covering certain merchant transactions. However, the government said there was no directive from either the RBI or Finance Ministry asking banks to increase ATM cash stock ahead of the new framework.

The clarification specifically concerned the headline circulating in the newspaper clipping and did not indicate any change in the government's position that consumers will not be charged transaction fees for UPI payments.

Which UPI payments will remain free

The Finance Ministry has clarified that person-to-person (P2P) UPI payments will remain completely free regardless of the amount transferred. Merchant payments of up to Rs 2,000 will also continue without charges, while transactions covered under the zero-MDR framework for small merchants will remain free. The ministry said about 96 per cent of merchant transactions will therefore remain unaffected.

Under the new framework, a 0.4 per cent Merchant Discount Rate (MDR) will apply to specified person-to-merchant (P2M) transactions above Rs 2,000. For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction.

MDR is not a customer charge, government says

The government has also clarified that MDR is neither a tax nor a charge collected from customers by the government or NPCI. Instead, the amount is distributed among participants in the payment ecosystem, including banks and payment application providers. Banks have been advised to ensure that merchants do not pass the MDR on to customers.

The Finance Ministry had separately reiterated that UPI users would not face transaction charges, with all P2P payments continuing to remain free.

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PIB Fact Check urges users to verify banking claims

The latest clarification came as financial information and claims about the revised UPI framework continued to circulate online. PIB Fact Check has advised people to check such claims through official sources, including government departments, the RBI and other authorised institutions, before forwarding them.

The government’s clarification makes clear that the reported instruction to banks to stock ATMs ahead of the UPI fee rollout was not issued by either the RBI or the Finance Ministry.