India to charge selected UPI merchant payments from 15 October
The National Payments Corporation of India will introduce a 0.4 per cent Merchant Discount Rate on business transactions above 2,000 rupees, while person-to-person payments remain free.
India’s National Payments Corporation of India is set to introduce charges for selected UPI merchant payments from 15 October, ending about a decade of free transactions on the country’s widely used digital payments system.
The 0.4 per cent Merchant Discount Rate will apply to payments to businesses above 2,000 rupees, capped at 300 rupees. Some services, including fuel purchases, railway tickets and telecommunications bills, will carry a flat five-rupee fee. Person-to-person payments will remain free.
The government says the charge is intended to create viable revenue for the payments ecosystem and support investment in payment infrastructure, including in rural and semi-urban areas. Merchants will be barred from passing the cost directly to customers, although one retailer told Al Jazeera he had already added a five-rupee charge to larger transactions.
The proposal has drawn criticism from merchants, industry representatives and opposition politicians. The Retailers Association of India warned that smaller businesses could reconsider accepting UPI, while Congress accused the government of responding to pressure from the United States. The government has rejected those claims as false.
UPI processed a reported record 24.51 billion transactions in the previous month. Analysts estimate the new charges could create an annual revenue pool of about 170 billion rupees, shared among banks, payment applications and aggregators. Shares in some Indian payment firms and banks rose after the policy was announced.
