India consults banks and payment firms on fees for UPI merchant payments above ₹2,000
Indian authorities are discussing a potential 0.4% charge on larger UPI merchant transactions, according to sources. Peer-to-peer transfers would remain free; the final rate and how revenue is shared among banks and payment firms are still undecided.
What happened
Unified Payments Interface (UPI) · Indian authorities are consulting banks and payment firms on charges for UPI merchant payments above ₹2,000. A proposed 0.4%
Key facts
- UPI transactions above ₹2,000 may be charged
- 24 billion UPI payments in August
- $311 billion UPI payment value in August
- 0.4% proposed charge
- Banks could receive 40% of fee revenue
What changed
Indian authorities are consulting banks and payment firms on charges for UPI merchant payments above ₹2,000. A proposed 0.4% fee could create new revenue for banks, Paytm, Pine Labs, PhonePe and Razorpay, while peer-to-peer transfers remain free.
Why this matters
Retailers should model a potential 0.4% cost on UPI merchant payments above ₹2,000 and assess whether checkout, tender-routing or pricing adjustments are needed if the proposal advances.
What to watch
- Finance Ministry, RBI and NPCI consultation outcomes, including whether the fee is mandatory, capped or voluntary.
- Final transaction threshold, merchant-category exclusions, small-business exemptions and treatment of GST.
- Revenue-sharing rules among issuing banks, acquiring banks, PSPs, TPAPs and NPCI.
- Any commitment to restore or expand government reimbursement for zero-MDR UPI transactions.
- Payment-app changes to merchant pricing, high-value transaction limits, settlement products or promotional incentives.