Pay wall: On a charge on UPI transactions
The Indian government is preparing to allow banks and payment processors to levy charges on UPI transactions, specifically targeting large merchants and high-value payments. While the move aims to make the payment ecosystem sustainable, it raises concerns about potential costs being passed on to consumers and a possible shift back to cash.
Why it matters
UPI has been a cornerstone of India's digital economy; introducing fees could alter consumer behavior and impact the widespread adoption of digital payments.
The government’s decision to allow banks and payment processors to levy a charge on UPI transactions , while still pending, has already led to several policy questions. No official decision has yet been announced, but the preparations are apparent. The only official change that has been made is the amendment to the Payment and Settlements Systems Act that will now allow the government to notify which types of transactions can attract a charge. This was done through the Taxation and Other Laws (Amendment) Bill, 2026, which was passed in the Lok Sabha recently without a debate. Before this law, UPI and RuPay debit card transactions were expressly exempt from any charges. Government sources say that the charge could be allowed only for transactions conducted by large merchants with turnovers of more than ₹1 crore-₹1.5 crore and for transactions above ₹2,000 in value.
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