India considers charging fees on certain high-value merchant UPI transactions, marking a significant policy shift aimed at funding infrastructure while maintaining affordability for consumers amid the system’s rapid global expansion.
India is moving towards allowing fees on some merchant UPI transactions, a significant shift for a payments rail that has become central to the country’s digital economy. The proposed framework would let banks and payment processors levy charges on certain high-value merchant payments, while the government says ordinary consumers should not see direct costs. Officials have framed the change as a way to raise money for infrastructure, innovation and cybersecurity.
Nirmala Sitharaman, India’s finance minister, has said the levy would apply only to large merchants and only above a threshold, with small businesses remaining exempt. That distinction matters because most UPI payments are low-value: the bulk are under 2,000 rupees, or about $21, according to the government’s own description of the market.
The debate comes as UPI’s scale keeps expanding. The system, launched in 2016 by the National Payments Corporation of India, handled about 185.8 billion transactions in FY25, a 41.7% increase from the previous year, according to Business Standard. The Economic Times reported that in the second half of 2025 UPI accounted for 85.5% of all payment transactions in India by volume, even as it represented only 9.5% of total value, underscoring its role in everyday, low-ticket spending.
UPI’s reach is now global as well as domestic. Reuters has previously reported that the platform is accepted in several countries, including Singapore, France, Qatar and the United Arab Emirates. The Times of India, citing comments by Amitabh Kant, said UPI has overtaken Visa to become the world’s largest real-time payments system, with more than 650 million daily transactions. If charges are introduced, the government’s aim is to preserve cheap, easy payments for ordinary users while giving banks and fintech companies a revenue stream to support the system’s next phase of growth.
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