The National Payments Corporation of India has postponed a planned 0.4% levy on selected UPI merchant payments above 2,000 rupees, keeping the new charge off the system during the peak festive shopping season.
India’s payments network operator has delayed the planned introduction of a merchant fee on some Unified Payments Interface transactions until after Diwali, a move that should spare retailers and payment firms from having to adapt during the busiest shopping period of the year. The National Payments Corporation of India said on Tuesday that the change, originally due on October 15, will take effect on a date to be announced separately, with the timing chosen “keeping in mind the festive season”.
The levy would apply only to selected person-to-merchant payments above 2,000 rupees, leaving person-to-person transfers unaffected. Industry reports said the charge, set at 0.4%, is aimed at higher-value merchant payments and would not apply across the board. Mint reported that NPCI chief executive Dilip Asbe confirmed the deferral, while other Indian business publications said the UPI and Services Steering Committee made the decision on October 13.
The postponement comes amid pushback from traders and concerns that a fresh fee could crimp spending during the festival window, which runs through the end of the year and typically drives a sharp rise in purchases of cars, clothing, jewellery, groceries and household goods. Reuters reported last week that delaying the rollout would also give payments companies time to adjust their systems and reduce the chance that costs are passed on to customers. In India’s digital economy, where UPI is used by more than 500 million people, that seasonal backdrop matters as much as the policy itself.
The move does not appear to cancel the merchant fee altogether. Rather, it delays the first significant pricing change in a payments system that has, for more than six years, largely operated without charges on bank account-based UPI transactions. According to industry estimates reported by Economic Times, most low-value merchant payments should remain outside the new framework, while the sharper impact may fall on larger transactions by value. For now, however, the immediate effect of the announcement is to keep UPI payments free of the new levy through the peak festive period.
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