India postpones UPI payment fee rollout until after Diwali festival
- India postpones the 0.4% UPI payment fee until after Diwali, a timely move to support festive season spending for millions of users
MUMBAI: India has postponed the rollout of a fee on large payments via its popular Unified Payments Interface platform until after the Diwali festival, the National Payments Corporation of India (NPCI) said on Tuesday.
A 0.4% charge for merchants on transactions exceeding 2,000 rupees ($21) was scheduled to take effect on October 15.
The deferral is “keeping in mind the festive season”, and the fee will be implemented immediately after the Hindu festival on a date that will be notified separately, NPCI said in a statement.
Diwali, which will be celebrated across India on November 8, typically marks the peak of consumer spending in Asia’s third-largest economy, with shoppers splurging on cars, clothes and home appliances.
The proposed fee, which would end more than six years of zero-cost UPI payments in India, had drawn opposition from retailers.
The postponement is “timely and pragmatic”, the Confederation of All India Traders (CAIT), which represents millions of brick-and-mortar retailers, said in a statement.
India considers delaying rollout of UPI payments fee, sources say
The decision follows a meeting of around 20 trade industry representatives with India’s finance minister on September 30, CAIT said.
The delay in implementation would likely allow payments firms to upgrade systems and not pass on costs to customers, while addressing issues that retailers may face during the festive period, Reuters reported last week, citing sources.
The industry would be ready to implement the fee after the festive season, said Vishwas Patel, chairman of the Payment Council of India, an industry group.
UPI is used by over 500 million people to buy everything from cups of tea to iPhones. Walmart’s PhonePe and Alphabet’s Google Pay had about 80% market share by value of UPI transactions in August.
Shares of digital payments firms Paytm, Pine Labs and One MobiKwik Systems gained 1%, 1.8% and 1.3%, respectively, after the news.
India consults banks, payment firms on fees for large UPI payments, sources say
“The notice…brings certainty that the MDR (Merchant Discount Rate) is going to be implemented and there is no more scope of any pushback…versus the earlier uncertainty around the timeline,” said Rahul Jain, director of research at Dolat Capital.
“That is a positive for the companies,” he added.