India to impose controversial fee for UPI instant payments: Who benefits?
It's the end of an era for India's popular instant digital payments system, which has been free of charge until now.
New Delhi, India – Prime Minister Narendra Modi’s government is poised to levy new charges for using the country’s popular, homegrown instant digital payment system for select merchant transactions, raising concerns for businesses.
India’s quasi-governmental National Payments Corporation of India (NPCI) has announced that a 0.4 percent fee will apply from October 15 to all UPI (Unified Payments Interface) transactions above 2,000 rupees ($21) made to businesses.
Since its introduction a decade ago, the UPI – which allows customers to make instant payments via apps, free of any cost – has transformed how the world’s largest population makes payments. From street vendors to global brands in shopping malls, QR codes are everywhere in India, as cash increasingly gives way to digital payments.
Over the past decade, several companies, including PhonePe, Google Pay and Paytm, have complained that when they process huge UPI volumes, they have limited direct monetisation of those transactions. However, amassing millions of users on the platform allowed them to sell many different types of services to returning customers, from cash or gold loans to insurance.