India delays its UPI merchant fee after pushback from retailers

The National Payments Corporation of India has postponed the 0.4% fee on eligible UPI merchant transactions above ₹2,000 (about $21) that was due to start on 15 October. NPCI cited the festive shopping season and said the rollout will follow Diwali, without giving a new date.

The fee would end India's policy, in place since January 2020, of keeping UPI free for merchants. Small merchants receiving under ₹100,000 a month were exempt, and the charge was capped at ₹300 per transaction. Retailers and petrol pump operators opposed it, some warning they would stop accepting UPI.

UPI processed 24.07 billion transactions worth ₹29.37 trillion (about $305 billion) in September. NPCI puts the annual cost of running the network at about ₹200 billion.

The read: the fee is how UPI would pay for itself without subsidies; the delay leaves Google Pay and PhonePe's economics unresolved.