UPI merchant fees possible after India bill passes

India's parliament has passed legislation that could allow merchant fees on some business transactions through the Unified Payments Interface, the digital payments system used by nearly 555 million people.

The bill passed the upper house on Monday after clearing the lower house last week. It does not itself impose fees, but creates a legal framework for banks and payment processors to charge businesses for some UPI transactions.

Finance Minister Nirmala Sitharaman said the change could help banks and fintech companies invest in infrastructure, innovation and security. She told the upper house that the bill “does not impose any tax or transaction charge on UPI users” and said it would apply only to large merchants for transactions above a threshold.

UPI, launched in 2016, allows payments across participating apps and banks. Finance ministry figures put UPI transaction volumes at 241 billion payments worth about $3.3 trillion in the last fiscal year, five times the volume of five years earlier.

The International Monetary Fund has described UPI as the world's largest real-time payment system by volume. The system is operated by the National Payments Corporation of India, a not-for-profit company under the Reserve Bank of India and the banking industry.