Retailers and payments firms are urging India to delay a proposed 0.40% UPI merchant fee on eligible transactions above ₹2,000, with the launch potentially moving from October to January 2027.
Retail bodies and payments firms are pressing for a delay to India’s planned merchant fee on some UPI transactions, as the government weighs pushing the launch from 15 October to 1 January 2027. According to media reports cited by multiple outlets, the proposal is under discussion within the UPI and Services Steering Committee, which is chaired by the National Payments Corporation of India, and a decision is expected in the coming days.
The move would give merchants and payment companies more time to prepare and would also keep the new charge out of the festive-season shopping period, when digital payments typically rise sharply. LiveMint reported that the proposed fee is not a direct consumer levy but an interchange charge within the payments chain, while The Times of India said the delay is being considered to avoid disruption during a busy retail period.
The framework under discussion would apply a 0.40% merchant discount rate, or MDR, on eligible person-to-merchant UPI payments above ₹2,000, with a cap of ₹300 per transaction. Outlook Money reported that trader groups, fintech firms and payment companies have asked for more time to adapt, while Channeliam said confusion over fee rates and transaction categories has added to the pressure for a postponement. The All India Consumer Products Distributors Federation has estimated that the broader retail and FMCG distribution ecosystem could face an extra ₹7,000 crore to ₹9,000 crore in annual costs, and the All India Mobile Retailers Association has pushed for a flat minimal fee instead of a percentage charge.
The government has told the Supreme Court that the new framework would affect only about 4% of all transactions, leaving the rest outside the charge. Under the proposed split, the acquiring bank would collect the MDR from the merchant, pass 0.28% to the issuing bank, with 0.12% going to the payer-side payment service provider bank and 0.08% to the UPI app provider. The debate comes as UPI continues to expand rapidly: StartupTalky said September volumes reached 24.07 billion transactions worth ₹29.37 trillion, while LiveMint reported 24.51 billion transactions worth ₹29.82 lakh crore in August, underlining how central the platform has become to India’s payments system.
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