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India weighs merchant fees for UPI, ending era of free payments
The proposals discussed by the government include a merchant discount rate of 0.3% to 0.5% on larger transactions, while person-to-person payments would stay free.
For many Indians, Unified Payments Interface payments have become routine because users can scan a QR code and tap to pay without any visible fee. But BBC Business reports that India is now considering introducing merchant fees on some UPI transactions, a shift that could end more than a decade of effectively free digital payments for consumers.
The government has not set the final rate or scope, but proposals under discussion include a merchant discount rate of 0.3% to 0.5%. Under that framework, the fee would be paid by businesses to banks and payment processors that handle UPI payments, and it would reportedly apply only to some transactions above a threshold, at a nominal level, leaving most UPI payments free.
Officials say consumer payments and person-to-person UPI transfers would remain free. Still, the article notes that putting a price on UPI could test the network’s appeal, particularly for merchants who have benefited from not paying MDR as UPI expanded.
UPI launched in 2016 and has grown into one of the world’s biggest real-time payment networks. In July alone, official data cited by BBC Business showed 23.6 billion UPI transactions worth 29.87 trillion rupees, and the system is used by more than 550 million people across India and in some form in 11 other countries.