Key Takeaways
- India may delay implementation of a 0.4% fee on large UPI transactions by a few months.
- The fee was set to start from October 15 and would affect festive season spending.
- Retailers and brokers opposed the fee, leading to discussions for a delay.
India is considering delaying the rollout of a 0.4% fee on large payments via its Unified Payments Interface (UPI) platform by a few months, according to sources familiar with the discussions.
The fee, which was set to come into effect from October 15, would have coincided with India’s annual festive season, typically seeing a surge in consumer spending.
Retailers and a large broker opposed the fee, leading to discussions for a delay. A final decision on delaying the rollout has yet to be taken by the National Payments Corporation of India (NPCI), but is expected in the coming days.
A delay in implementation would allow payments firms to upgrade their systems and avoid passing on costs to customers, while addressing issues retailers may face during the festive period, the sources said, requesting anonymity as the discussions are private.
The fee could kick in from January, according to an industry executive.
UPI is used by over 500 million people in India to buy everything from roadside cups of tea to iPhones, making it a critical part of the country’s digital payment ecosystem.
Walmart’s PhonePe and Alphabet’s GooglePay had about 80% market share by value of UPI transactions in August, highlighting the significant impact of the fee on these companies.
Stocks of Indian digital payments firms, including Paytm and Mobikwik, dropped on Thursday, with Paytm and Mobikwik dropping 5.5% and 7% respectively, while Pine Labs slid 3%.
The fee was introduced to end more than six years of zero-cost payments for merchants on transactions exceeding 2,000 rupees (USD21).
