India Paves the Way For Charging Merchants a Fee On UPI Transactions
An anonymous reader quotes a report from the BBC: For most Indians, paying by Unified Payments Interface (UPI) has become almost absurdly routine. Scan a QR code, tap a few buttons and the money moves instantly. There is no card machine, no cash, and -- most importantly -- for the user, no visible fee. That may be about to change. India has paved the way for banks and payment companies to charge…
For most Indians, Unified Payments Interface (UPI) has become a seamless means of payment, requiring only a QR code and a few taps on a device. This frictionless experience has been the driving force behind the network's rapid growth, with over 550 million users and more than 241.6 billion transactions in the latest financial year alone.
However, India is now considering the introduction of merchant fees on UPI transactions, potentially bringing an end to the decade-long experiment of free digital payments. The government is exploring a merchant discount rate (MDR) of 0.3-0.5% on larger transactions at major businesses, but consumer and person-to-person UPI payments will remain fee-free.
The proposed fee would only apply to transactions exceeding a certain threshold, ensuring that the majority of UPI transactions would remain unaffected. If implemented, these merchant fees could potentially weaken the merchant network that has been instrumental in UPI's success, as small vendors have found it easy to accept payments using just a QR code.
RBI governor Sanjay Malhotra highlighted that someone will have to bear the costs of this new fee structure, and the challenge lies in maintaining UPI's sustainability without undermining the merchant ecosystem that contributed to its widespread adoption.
Written by urgent.news from Slashdot's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
