India's UPI fee faces retailer, broker pushback
NEW DELHI: India’s decision to start charging some merchant payments under its popular Unified Payments Interface has drawn opposition from retailer bodies, with businesses warning the move could squeeze margins ahead of a crucial festival period. On Tuesday, the National Payments Corp said it would charge a 0.4% merchant fee on transactions above 2,000 rupees ($20), ending more than six years of…
India's decision to impose a 0.4% merchant fee on certain payments through its popular Unified Payments Interface (UPI) has sparked criticism from retail groups. The National Payments Corp announced the fee for transactions exceeding 2,000 rupees ($20), following a six-year period of fee-free payments that fueled UPI's rapid growth.
The government and central bank support the move. However, the Retailers Association of India warns the fee may drive merchants towards cash transactions, especially during October and November festivals when spending typically increases. RAI CEO Kumar Rajagopalan argues small merchants will reconsider whether to accept UPI or cash.
Similar concerns were voiced by the Clothing Manufacturers Association of India, which says the timing is particularly challenging for apparel manufacturers trying to boost margins. Meanwhile, a public-interest lawsuit has been filed in India's Supreme Court, questioning the fee's legality due to alleged lack of statutory authority and safeguards.
Brokers are also concerned, with Zerodha CEO Nithin Kamath stating that the fee could make it difficult to absorb additional costs on transactions, including those for stockbrokers and mutual funds.
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