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India introduces merchant fees on larger UPI transactions

Starting October 15, a 0.4% merchant discount rate will apply to UPI payments above 2,000 rupees, capped at 300 rupees.

Reported · Written up by our desk · Trade & Tariffs

SCMP Economy reports that India is rolling out a new merchant discount fee for Unified Payments Interface, or UPI, transactions above a threshold, about a decade after the government launched the payments system widely associated with low costs for consumers.

Under the framework, a 0.4% processing fee for merchants will apply to UPI payments exceeding 2,000 rupees (US$21) beginning October 15, with the charge capped at 300 rupees.

The change targets how UPI generates revenue, as the outlet notes that the system has so far charged consumers nothing for everyday transactions, and the fee is expected to help fund maintenance and expansion.

Experts cited by SCMP Economy said the rollout will be key to determining whether UPI can preserve its low-cost model while bringing in enough revenue to support growth.

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