India weighs delaying UPI merchant fee that was due October 15

India is considering delaying by a few months a new fee on large payments over its Unified Payments Interface, Reuters reported on October 8, citing a regulatory official and an industry executive familiar with the discussions. Both spoke on condition of anonymity because the talks are private, according to the Reuters report as carried by Business Recorder.

The fee, a 0.4 percent charge to merchants on transactions above 2,000 rupees (about $21), is due to take effect on October 15. That date falls at the start of India’s October-to-December festive season, when consumer spending typically rises. A delay would keep retail payments from being disrupted during the season and give the payments industry more time to prepare, the sources said. Shares of Indian digital payments companies fell on Thursday on the news, according to Reuters. A final decision had not been taken but was expected in the coming days, one source told Reuters, according to The Bridge Chronicle.

The National Payments Corporation of India announced the fee on September 15, ending more than six years of zero-cost merchant payments on UPI, according to CNBC. Person-to-person transfers remain free, and the fee is capped at 300 rupees per transaction for payments above 75,000 rupees. CNBC reported that the charge is lower than the 0.9 percent levied on debit card transactions and the 1.5 to 2.5 percent on credit cards. Payments above 2,000 rupees account for about 4 percent of merchant payment volume but about 67 percent of transaction value, according to Reuters figures cited by CNBC.

NPCI has barred merchants from passing the fee on to consumers, though critics worry that will eventually happen, according to PYMNTS. Retailers and a large broker have opposed the fee, according to Reuters. UPI processed 24.5 billion transactions worth 29,823 billion rupees for more than 550 million users in August, PYMNTS reported.

NPCI is also developing a national registry to vet AI agents on UPI, Reuters reported on September 10.