India to impose controversial fee for UPI instant payments: Who benefits?
Summary
India’s government will start charging a 0.4 percent fee on Unified Payments Interface (UPI) transactions over 2,000 rupees ($21) made to businesses, beginning October 15. The fee aims to help cover the cost of running the digital payment system but has raised concerns among merchants about higher costs.Key Facts
- UPI is India’s digital payment system that allows instant, free payments through apps and QR codes.
- From October 15, a 0.4% fee (capped at 300 rupees or about $3.13) will apply to business transactions above 2,000 rupees ($21).
- Person-to-person UPI payments will remain free of charge.
- A flat fee of 5 rupees ($0.05) will be charged for payments for some services like fuel, train tickets, and telecom bills.
- The fee is called the Merchant Discount Rate (MDR) and shifts payment infrastructure costs to businesses.
- The government bans businesses from passing the fee directly to customers, but some merchants have started charging extra to cover costs.
- UPI processes nearly half of all global real-time digital payment transactions, with 24.51 billion transactions in one month worth over $10 billion daily.
- UPI has been adopted in 10 countries, including Singapore, UAE, France, Sri Lanka, and Qatar.
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