India Introduces 0.4% Merchant Fee on UPI Transactions

India’s Reserve Bank of India announced that, from October 15, a 0.4 % merchant fee will be levied on specific Unified Payments Interface (UPI) transactions. The fee applies to payments made through the UPI platform that are processed via merchant accounts, including those used for retail and online purchases. The decision follows a broader regulatory review of digital payment charges, aimed at standardising fees and ensuring transparency for both merchants and consumers.

Under the new rule, merchants will be required to remit the fee to the RBI on a monthly basis, and the charge will be reflected in the transaction settlement statements. The regulator has stated that the fee will not affect basic UPI transfers between bank accounts, but will apply to transactions that involve a merchant’s payment gateway. The move is part of the RBI’s ongoing efforts to streamline the digital payments ecosystem, reduce cost disparities, and promote a level playing field for all participants.

The introduction of the 0.4 % fee is expected to generate additional revenue for the RBI while also encouraging merchants to adopt more efficient payment solutions. Stakeholders have been given a transition period to adjust their billing systems and inform customers of the new charge. The RBI has indicated that it will monitor the impact of the fee on transaction volumes and consumer behaviour in the coming months.