The Global Trade Research Initiative warns India against changing its UPI fee structure, emphasising the importance of fee-free transactions for small merchants amid external pressures and cybersecurity funding concerns.
India should resist any pressure to change its UPI rules for the sake of foreign trade complaints, the Global Trade Research Initiative has argued, as debate intensifies over whether the country should allow charges on its fast-growing digital payments network.
According to the think tank, the government’s recent move to amend the Payment and Settlement Systems Act, 2007, has reopened the question of whether banks and payment providers may levy fees on Unified Payments Interface transactions and other notified electronic payment methods. The law already places the Reserve Bank of India at the centre of oversight for payment systems, while requiring operators to work within a regulatory framework designed to keep transactions efficient and secure.
GTRI said the current zero merchant discount rate has been central to UPI’s rapid adoption, particularly among small shops, roadside vendors and other merchants that have benefited from fee-free digital payments. At the same time, the group acknowledged that banks, the National Payments Corporation of India and payment firms still need funding for cybersecurity, fraud controls, server capacity, dispute resolution and expansion of the system.
Ajay Srivastava, GTRI’s founder, said India should not introduce merchant charges simply to answer criticism from the United States or to shield foreign card networks such as Visa and Mastercard. He also argued that payment data should remain local, saying it is sensitive, commercially valuable and important for fraud probes, cybersecurity and national security. GTRI suggested that if the system needs support, policymakers could consider targeted budget funding, incentives, charges on large commercial payments, cross-subsidies from financial services or narrowly focused fees on high-turnover merchants instead of a broad levy on everyday use.
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