India delays digital payments fee rollout amid merchant opposition
India has postponed the implementation of a new 0.4% merchant fee on UPI transactions over ₹2,000 due to strong pushback from retailers and other businesses. The National Payments Corporation of India (NPCI) cited the upcoming Diwali shopping season as a reason for delaying what was initially scheduled for October 15. This marks a shift in policy after years of keeping digital payments free for merchants under UPI, which has become central to India’s financial ecosystem. The proposed fee had drawn significant opposition from small businesses and petrol pump operators who warned they might stop accepting UPI if the charge went into effect. NPCI aims to use the collected fees to fund infrastructure improvements, cybersecurity measures, and fraud prevention within the system. The organization also announced exemptions for smaller transactions and capped charges on larger ones in an effort to minimize disruption. UPI has seen explosive growth since 2020 when transaction fees were removed by the government as part of a push toward digital payments. In September alone, UPI processed over $305 billion worth of transactions.
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Topics: digital payments India's NPCI merchant opposition UPI fees