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GTRI urges govt to withdraw 0.4% UPI merchant fee on transfers above Rs 2,000, due from 15 October
Our read
The 0.4% fee is more likely to be softened or delayed than to start unchanged on 15 October.
For operators
If the 0.4% merchant fee on UPI transfers above Rs 2,000 takes effect on 15 October, retailers should model the hit to margins on big-ticket baskets now and decide whether to raise prices or steer shoppers to other payment modes, since UPI has been free for nearly six years.
Watch
An official notification, circular or clarification on the 0.4% fee ahead of 15 October
The report
GTRI warned the UPI charge could raise prices, squeeze small business earnings and cut UPI's price advantage over cards, benefiting Visa and Mastercard. It also wants an independent audit to establish and publish UPI's actual running costs.
- Proposed UPI merchant fee
- 0.4%
- PhonePe and Google Pay share of UPI transactions
- more than 80 per cent
- UPI users in India
- more than 55 crore
- Annual UPI payment value as share of GDP last year
- more than 91 per cent
What we verified
Checked against the other reports of this story.
- Not a single-source story: Moneycontrol, The Hindu BusinessLine and Outlook Business report the same development independently.
The counter-case
The case against this reading — not reported by the source.
The headline reads as a done deal, but the signal is a think tank lobbying. GTRI urging withdrawal is an advocacy position, not a government decision, and the fee may be narrowed, delayed or reversed before 15 October. The harm GTRI predicts (higher prices, squeezed small businesses, a windfall for Visa and Mastercard) is projection, not observed outcome. A 0.4% charge applies only to transfers above Rs 2,000, so most small-ticket UPI payments may be untouched. Merchants could absorb the cost, or customers could shift to cheaper payment routes, so the pass-through to prices is far from certain. The Visa and Mastercard claim is also a stretch. UPI has more than 55 crore users and a deeply entrenched habit after nearly six years of being free, so a modest fee on larger payments is unlikely to push volume to card networks quickly. The concentration point (PhonePe and Google Pay above 80%) cuts both ways. It may show that a few large players could build the fee into their economics without much disruption, rather than that small businesses will be hurt. For a retail-company theme, the signal gives no company-level earnings effect, so its worthiness for investors is thin.
What to watch next
- Any announcement of a deferral, rollback or small-merchant exemption
- PhonePe or Google Pay statements on whether they will pass the charge to merchants
- Reports of merchants adding surcharges or refusing UPI payments above Rs 2,000
- UPI transaction volumes in the weeks after 15 October, and any gain in card share
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- The Ministry of Finance is likely to issue a clarification or FAQ before 15 October, either narrowing the fee's scope or defending it, as industry and trader objections build.
- PhonePe and Google Pay, with more than 80% of UPI transactions between them, are likely to tell merchants how the 0.4% charge will be applied, and may absorb it for some merchants to protect volumes.
- Small merchants and trader bodies are likely to lobby for an exemption, and some may add surcharges or minimum-spend rules on payments above Rs 2,000.
- Visa and Mastercard may step up merchant-acquiring pitches for card payments if UPI stops being free for larger transfers.
- Opposition parties and consumer groups may take up the fee as a political issue, raising the odds of a delay.
Background
Later reports that look back at earlier events in this story, newest first. They add context; nothing on this page has changed.
Resurfaced 19 Sept demand: states urge GST Council to cut UPI MDR GST from 18% to 5% or exempt it
On the record
Earlier Unified Payments Interface (UPI) reports on RetailIntel, newest first.
Reported figures
From the report. Source details below
| PhonePe and Google Pay share of UPI transactions: | more than 80 per cent |
|---|---|
| UPI users in India: | more than 55 crore |
| Annual UPI payment value as share of GDP last year: | more than 91 per cent |
| Duration of fully free UPI: | nearly six years |