India delays digital payments fee rollout amid retailer pushback
India has postponed the implementation of a 0.4% merchant fee on UPI digital payments following significant pushback from retailers. The fee, originally set for October 15, will be delayed until after the Diwali shopping season to avoid disrupting commerce.
Why it matters
The decision highlights the tension between monetizing digital payment infrastructure and maintaining widespread merchant adoption in a cash-heavy economy.
Following broad pushback from merchants across the country, India has delayed plans to introduce merchant fees on its digital payments network that aimed to make the business more lucrative for the companies that facilitate the payments service, long dominated by Google and PhonePe.
The National Payments Corporation of India (NPCI), which operates the country’s Unified Payments Interface (UPI), said on Tuesday it was postponing the planned October 15 rollout of a 0.4% fee on eligible merchant transactions exceeding ₹2,000 (about $21), citing the festive shopping season. The fee, announced last month, would mark a significant departure from India’s years-long policy of keeping UPI payments free for merchants.
The rollout will now take place after Diwali, one of India’s biggest festivals and shopping periods, though the NPCI did not specify a new date. In September alone, UPI processed 24.07 billion transactions worth ₹29.37 trillion (about $305 billion), per NPCI.
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