UPI Merchant Charges Above Rs 2,000 To Be Implemented After Diwali - NDTV

The Reserve Bank of India announced that, starting in the week after the Diwali festival, merchants will be required to pay a fee on Unified Payments Interface (UPI) transactions that exceed two thousand rupees. The new merchant discount rate, set at a modest percentage of each qualifying transaction, is intended to offset the operational costs incurred by banks and payment service providers in processing larger digital payments. The policy follows a series of consultations with industry stakeholders and is part of a broader effort to ensure the long‑term sustainability of the country’s fast‑growing cash‑less ecosystem.

Small shop owners and street vendors have expressed concern that the additional charge could erode profit margins on high‑value sales, especially in sectors such as electronics, jewellery and home appliances where average ticket sizes often surpass the threshold. Some merchants fear that customers may revert to cash or seek alternative payment methods to avoid the fee, potentially slowing the momentum of digital adoption that has been built over the past few years. Analysts suggest that businesses will need to adjust pricing strategies or absorb the cost in order to maintain competitiveness.

Industry associations, including the Confederation of Indian Industry, have called for a phased implementation and greater transparency in how the fee is calculated. The government’s finance ministry has indicated that the revenue generated will be reinvested in strengthening payment infrastructure and enhancing security features for UPI users. Consumers are being advised to monitor transaction amounts and consider splitting larger purchases into multiple smaller payments where feasible. The coming weeks will reveal how quickly merchants adapt and whether the policy influences overall transaction volumes on the platform.