India's UPI payment system will charge merchants a 0.4% fee on transactions above ₹2,000 ($21) starting October 15, marking the end of free processing for larger payments.
The National Payments Corporation of India (NPCI) has introduced the fee structure after years of zero-cost transactions on the country's dominant digital payments platform.
The 0.4% merchant fee applies only to payments exceeding ₹2,000, while smaller transactions remain free. This tiered approach balances revenue generation with accessibility for everyday purchases.
UPI has grown into one of the world's largest real-time payment systems, processing billions of transactions monthly. The fee introduction reflects mounting pressure to monetize the platform as transaction volumes surge.
Merchants have expressed concerns about margin compression, particularly for small retailers operating on thin profit margins. However, the fee threshold of ₹2,000 exempts the majority of retail transactions in India's economy.
The move comes as UPI faces competition from other digital payment methods and international payment platforms. Industry analysts expect the fee to have limited impact on UPI's market dominance given its entrenched position in Indian commerce.
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India will begin charging a 0.4% merchant fee on certain payments through its UPI digital payments network starting October 15. The fee marks the end of free transactions on the platform.