NPCI Delays 0.4% UPI Merchant Fee Until After Diwali

The National Payments Corporation of India (NPCI) has postponed a planned 0.4% fee on eligible Unified Payments Interface (UPI) transactions above ₹2,000 until after Diwali, delaying a major change to India’s digital-payments system.

The rollout had been scheduled for Oct. 15. NPCI has not set a new date.

The fee would apply to larger merchant payments made through UPI, while transactions of ₹2,000 or less would remain exempt. Merchants receiving less than ₹100,000 per month through UPI would also be excluded, and the charge would be capped at ₹300 for larger transactions.

Retailers and petrol pump operators opposed the plan. Some warned they could stop accepting UPI payments if the fee took effect.

UPI processed 24.07 billion transactions worth ₹29.37 trillion in September. The network supports payments through apps including Google Pay, PhonePe and Paytm, making the proposed charge significant for merchants and payment providers operating across India.

The Indian government scrapped merchant fees on UPI payments in January 2020 to encourage consumers to shift away from cash. The proposed fee would help fund infrastructure, cybersecurity and fraud prevention as the network expands.

The annual cost of operating UPI is estimated at about ₹200 billion, including server capacity, fraud prevention and technical support. The proposed fee would distribute collected funds among participants in the UPI ecosystem.

The revised rollout remains scheduled for after Diwali, but no specific date has been announced.