India Introduces 0.4% Fee on High-Value UPI Transactions, Sparking Business Concerns
· Business · BBC News, News18, Times of India
India’s National Payments Corporation of India (NPCI) will charge a 0.4% Merchant Discount Rate (MDR) on UPI transactions above ₹2,000 made to businesses, effective October 15. The fee, capped at ₹300 per transaction, applies only to merchant payments—person-to-person transfers and smaller transactions remain free. Exemptions include QR code payments in rural/semi-urban areas and specific sectors like railways, telecom, and agriculture, which face a flat ₹5 fee. The government claims the charge will fund UPI’s expansion and cybersecurity, but experts warn it could increase costs for businesses, potentially discouraging adoption of the system. Until now, UPI’s infrastructure costs were borne by the government, banks, and payment providers.
Why it matters
Small vendors and businesses—already operating on thin margins—face higher operational costs, while consumers see no direct benefit as businesses cannot pass on the fee. The move could slow UPI’s growth, a cornerstone of India’s digital payments revolution, and test the balance between sustainability and accessibility for merchants.
Read the original report — BBC News
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