Payments
Parliament opens door to UPI merchant fees
Lawmakers clear the way for charges on shop payments, ending the long free ride that powered India’s digital commerce boom.
Kabir Menon, Payments correspondent··4 min read
Proposals under discussion centre on a merchant discount rate of 0.3-0.5% aimed mainly at larger tickets and bigger businesses. NPCI data shows the average UPI payment sits around Rs 606, so a 0.3% cut yields little more than Rs 1.80 per transaction.
July alone saw 23.66 billion UPI transactions worth nearly Rs 30 lakh crore. Two-thirds now go to merchants rather than person-to-person. PhonePe and Google Pay still handle roughly four-fifths of the volume.
NPCI’s own data shows the fee would miss almost everything India buys at the average ticket size.
The fee remains a proposal; exact rates and thresholds are undecided. Small kiranas and low-value everyday spends are expected to stay lightly touched, but quick-commerce and online checkouts that rely on high-frequency UPI could feel the pinch.
Fintechs and banks have long argued that zero MDR left the rails underfunded as volumes exploded past 24,000 crore transactions in the last financial year.