Third-party UPI applications in India warn that a new merchant discount rate structure, enacted after the ban on platform fees, may cut into their margins, as they receive a smaller share of transaction fees on bill payments.
Third-party UPI apps in India are warning that a new merchant discount rate structure could squeeze already thin margins on bill payments, after the National Payments Corporation of India barred separate platform fees on such transactions.
According to the report, apps have typically charged users ₹3 to ₹5 on payments for electricity, water, gas and credit card bills routed through Bharat Connect, the bill payment system formerly known as Bharat Bill Payment System. From October 15, those extra charges will no longer be allowed on UPI transactions, removing a small but important revenue stream for payment platforms.
The new framework introduces a flat ₹5 merchant discount rate on eligible bill payments above ₹2,000. But payment app operators say they will receive only about ₹1 of that amount, with the rest divided among other participants in the payments chain. That has prompted concern that the income left to the apps may not be enough to cover the commissions they pay to Bharat Connect, as well as their own processing and operating costs.
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