India postpones UPI payment fee rollout until after Diwali festival

Mumbai: India has delayed the implementation of a fee on large payments through its widely used Unified Payments Interface (UPI) system until after the Diwali festival, according to the National Payments Corporation of India (NPCI). The planned 0.4% charge for merchants on transactions over 2,000 rupees ($21) was initially set to begin on October 15.

The postponement is "in consideration of the festive season", and the fee will resume immediately following the Hindu festival, scheduled for November 8. Diwali generally marks the peak of consumer spending in India, with shoppers purchasing cars, clothes, and home appliances. The proposed fee ended six years of free UPI payments in India, but it faced opposition from retailers.

The Confederation of All India Traders, representing millions of brick-and-mortar retailers, welcomed the decision as "timely and pragmatic". The move to delay the fee implementation is expected to allow payments firms to upgrade their systems and not pass on costs to customers. This decision, reported by Reuters, came after a meeting between around 20 trade industry representatives and India's finance minister on September 30.

The industry anticipates being ready to implement the fee after the festive period, according to Vishwas Patel, chairman of the Payment Council of India. UPI, used by over 500 million people, is utilized for a range of transactions, from tea cups to iPhones. Major digital payment platforms like Walmart's PhonePe and Alphabet's Google Pay held about 80% market share by value of UPI transactions in August.

Shares of digital payments firms Paytm, Pine Labs, and One MobiKwik Systems rose 1%, 1.8%, and 1.3%, respectively, following the announcement.