A recent survey by Local Circles, a pollster focusing on governance and public issues, disclosed that 70% of users would stop using the application if UPI transaction fees were implemented.
In February 2024, UPI experienced a transaction value surpassing ₹16 lakh crore, marking a significant rise from the previous year’s ₹12 lakh crore, as per data from the National Payments Corporation of India (NPCI). An illustration of a transaction fee is the ₹20 charge levied by IRCTC for UPI payments.
In response to the potential introduction of a merchant discount rate (MDR) in UPI transactions, fintech companies have urged Finance Minister Nirmala Sitharaman to address the matter.
The fintech industry contends that they do not generate revenue from such transactions and has long advocated for the imposition of MDR, the rate charged to merchants for payment processing services across various payment instruments.
In August 2022, the Reserve Bank of India published a discussion paper suggesting a tiered structure charge on UPI payments based on different amount bands. However, the finance ministry clarified that there were no plans to impose convenience fees on UPI transactions.
The report also noted that certain payment gateways are already imposing transaction fees on UPI transactions, and some merchants are passing these expenses on to consumers.
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