RBI says UPI users already absorb costs; merchant-fee call still pending
Governor Sanjay Malhotra said UPI costs are borne indirectly across the economy, while a possible fee on merchant payments above Rs 2,000 remains under consideration. RBI is prioritising infrastructure investment and wider adoption, with a target of 800 million daily UPI transactions.
What happened
RBI Governor Sanjay Malhotra said UPI users indirectly bear transaction costs and that merchant-fee decisions remain premature. The government is considering
Key facts
- Rs 2,000 transaction threshold under consideration for merchant fees
- 800 million UPI transactions a day targeted
Why this matters
Payments, POS and merchant-acquiring platforms with pricing flexibility and high-value transaction exposure may become more strategic targets if RBI introduces UPI merchant fees, though deal assumptions should account for regulatory uncertainty.
What to watch
- Formal RBI, NPCI, Ministry of Finance, or Department of Financial Services consultation on UPI MDR or transaction thresholds.
- Any extension, redesign, or reduction of the UPI incentive scheme for banks and payment service providers.
- NPCI circulars affecting merchant categories, transaction limits, interchange-like economics, or enterprise API pricing.
- Large payment aggregators revising enterprise UPI pricing, settlement fees, or bundled checkout contracts.
- UPI transaction growth relative to the 800 million daily target, especially growth in high-value merchant transactions.
- Retailer or merchant-association lobbying for exemptions, caps, or differentiated treatment for small businesses.
- Model UPI payment acceptance costs under thresholds of Rs 2,000, Rs 5,000, and Rs 10,000, separating in-store and online transaction mixes.
- Audit categories with high average order values—electronics, jewellery, furniture, travel, premium grocery, and marketplace carts—for potential margin exposure.
- Prepare checkout-routing rules that preserve customer choice while prioritising the lowest-cost tender for high-value baskets.
- Renegotiate payment-aggregator contracts for MDR caps, transparent pass-through terms, settlement pricing, and fraud-loss allocation.
- Avoid pre-emptive customer surcharges; instead test merchant-funded incentives for lower-cost payment methods if a fee is formally introduced.
- Build finance and product capabilities to distinguish UPI base acceptance from paid services such as instant settlement, reconciliation, credit, and fraud screening.