The Indian government has officially announced a new pricing framework for the Unified Payments Interface (UPI), introducing a nominal charge on merchant transactions above a specified threshold. Under the revised structure, merchants accepting payments through UPI will be required to pay a fee of 0.4 per cent on transaction values that exceed Rs 2,000. However, individual consumers using UPI for their own personal payments remain completely exempt from any such charges.
This decision comes after months of deliberation within the government and the Reserve Bank of India regarding the long-term sustainability of UPI, which has seen exponential growth since its launch over a decade ago. The payment system now processes billions of transactions every month, becoming the backbone of digital commerce across the country.
Under the new guidelines, if a customer makes a UPI payment to a merchant for an amount greater than Rs 2,000, the merchant will bear the cost of the 0.4 per cent fee. This means a Rs 5,000 transaction would attract a charge of approximately Rs 20, which the merchant must absorb or pass on. Transactions at or below Rs 2,000 will continue to be free of any charges for both parties.
Financial experts note that the move is designed to create a sustainable revenue model for the ecosystem that supports UPI infrastructure, including payment service providers, banks, and financial intermediaries. The government has consistently maintained that ordinary consumers will never be asked to pay for using UPI for everyday purchases, keeping the system accessible to millions of small traders and everyday shoppers.
Merchant associations have expressed mixed reactions. Some small business owners worry that the additional cost could eat into already thin profit margins, while larger merchants and industry bodies have welcomed the clarity around pricing that had been absent for some time. Consumer rights groups have largely welcomed the exemption for individuals.
The government stated that the pricing framework will be implemented in phases, giving stakeholders adequate time to adjust their systems and understand the new fee structure. Details on the rollout timeline and operational guidelines are expected to be shared by the relevant regulatory authorities in the coming weeks.
