India Consults Banks on Possible Fees for Large UPI Payments
India’s payments authorities are consulting banks and payment companies over plans to introduce charges on large transactions through the Unified Payments Interface (UPI), according to sources familiar with the discussions. The consultations follow a change in Indian payments legislation that allows fees to be charged on UPI transactions above ₹2,000. UPI payments have so far remained free.
The discussions include the fee that could be charged on merchant payments and how the revenue would be divided among banks, payment apps and payment service providers. The National Payments Corporation of India and the Reserve Bank of India are reportedly considering a charge of around 0.4%, although the final rate has not been decided. Person-to-person UPI transfers are expected to remain free.
Introducing charges could create a new revenue stream for banks and payment companies. Jefferies estimates that merchant fees could generate between ₹50 billion and ₹100 billion annually for the payments industry. Companies including Paytm, Pine Labs, PhonePe and Razorpay could benefit from the proposed changes as India’s digital payments ecosystem continues to expand.
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