India’s payments authority is meeting with lenders and payment companies on Tuesday to discuss imposing fees on high-value transactions conducted through the world’s largest real-time retail payment system, three sources familiar with the matter told Reuters.
The talks follow a change to India’s payments law on Monday, which now permits companies to levy charges on transactions exceeding 2,000 rupees.
Until now, all payments made via the Unified Payments Interface have been free of charge.
The measure is expected to benefit banks and payment companies in Asia’s third-largest economy, which recorded 24 billion UPI transactions worth $311 billion in August.
Tuesday’s meeting agenda covers the overall fee to be charged on merchant payments and how it will be shared among banks, payment apps, and aggregators, according to two of the three sources.
Regulatory bodies, including the National Payments Corporation of India and the Reserve Bank of India, are inclined toward a 0.4% fee, though the exact rate and its distribution have not yet been finalized, the third source said.
As reported by Reuters, the second source stated that banks may receive 40% of the fee, with the remaining amount split equally between the payment app and the merchant payment service provider.
According to the sources, person-to-merchant transactions are expected to be monetised, while peer-to-peer transfers will continue to be free.
All the sources requested anonymity because they are not authorized to speak to the media. The NPCI and the RBI did not immediately respond to email requests for comment.
The introduction of fees on UPI transactions would benefit Paytm and Pine Labs, create an additional revenue stream for banks, and strengthen the outlook for IPO-bound firms such as PhonePe and Razorpay.
According to Jefferies analysts, these charges could generate between 50 billion and 100 billion rupees annually for the payments sector.
India’s payments ecosystem is largely dominated by apps backed by substantial foreign investment, including Walmart-supported PhonePe, Alphabet’s Google Pay, Paytm, and Meta-backed CRED.
