NPCI has postponed the planned 0.4% charge on larger merchant UPI payments, giving banks, payment firms and retailers more time to prepare before the festive shopping season.
India’s National Payments Corporation has pushed back the start of a proposed merchant fee on larger Unified Payments Interface transactions until after Diwali, a move that gives banks, payment firms and retailers more time to prepare for the change. The 0.4% charge had been due to begin on October 15, but the payments body said the new timetable was designed to avoid disruption during the festive shopping season. According to Livemint and other reports, the exact activation date will be announced separately.
The delay preserves the long-standing gap between India’s fast-growing digital payments market and the introduction of a transaction cost on select person-to-merchant UPI payments. Under the plan, the fee would apply only to payments above 2,000 rupees, while person-to-person transfers and smaller merchant transactions would remain free, according to reports from Livemint, The Week and Beebom. Dynamite News said the proposal is aimed at merchant payments above that threshold, leaving ordinary UPI usage untouched.
The timing matters because Diwali, which falls on November 8 this year, is typically the busiest consumer spending period in India. Shoppers tend to spend heavily on cars, clothing and household goods, and industry groups had argued that a new fee during that period could add pressure to merchants and payment providers. Livemint reported that the deferral was made with the festive season in mind, while the Confederation of All India Traders welcomed the decision as a sensible step.
Market participants now appear to be treating the delay as a sign that the government and payments industry are still committed to introducing the charge, but on a more orderly timetable. Reuters previously reported that the pause could help firms update systems and decide how to absorb the cost without passing it directly to customers. Analysts cited in earlier reports said the announcement also removes some uncertainty around whether the merchant discount rate would be implemented at all, which could be positive for listed payments companies.
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