India tables amendment to add merchant fees on select UPI

India has taken a legislative step that could end the zero-fee policy for merchants on its dominant Unified Payments Interface, potentially reshaping the financial technology landscape. The government introduced an amendment to the Payment and Settlement Systems Act in Parliament on August 4, 2026, creating a legal framework to reintroduce merchant discount rates on select UPI transactions. The move follows years of industry pressure, with banks and payment firms arguing the current model is unsustainable as transaction volumes and infrastructure costs soar.

The proposed amendment, tabled by Finance Minister Nirmala Sitharaman, does not itself impose any fees or specify an implementation date. Instead, it grants authorities the power to designate which UPI transactions may carry merchant charges, leaving the exact structure and rates to be decided later. Officials are reportedly considering a tiered approach to protect consumers and small businesses. One prominent proposal would apply a fee of between 0.3% and 0.5% only on transactions above 2,000 rupees and only for merchants with an annual turnover exceeding 15 million rupees.

UPI, operated by the National Payments Corporation...