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UPI Charges: India's Digital Payments Face New Fees
8 Oct
Summary
- UPI charges for merchants are set to begin on October 15.
- Think tank GTRI urges withdrawal, citing potential price hikes.
- The proposed fees could benefit foreign card networks over UPI.
The government's proposed introduction of charges for UPI transactions involving merchants, slated for October 15, has drawn criticism from the Global Trade Research Initiative (GTRI). The economic think tank advocates for the withdrawal of these fees, emphasizing their potential to negatively impact consumers and businesses. GTRI argues that imposing charges on merchants could escalate prices, diminish earnings for small businesses, and ultimately weaken consumer spending power. This could also erode UPI's cost advantage compared to credit card payments, potentially benefiting international payment processors.
GTRI founder Ajay Srivastava pointed out that banks and payment app providers benefit from UPI's widespread adoption through reduced cash handling and access to valuable customer data for financial product sales. He proposed that these entities should share the operational costs of UPI, thereby allowing it to remain free for users and merchants. Such an arrangement would preserve UPI's competitive edge against card networks like Visa and Mastercard, which are reportedly seeking greater access to the UPI system. The think tank stressed the importance of safeguarding UPI's affordability, a key economic strength for India.
