India is ending free processing for larger merchant transactions on its Unified Payments Interface (UPI), the QR-code-based digital payments network that underpins much of the country's economy. From 15 October, the National Payments Corporation of India (NPCI), which runs UPI, will charge a 0.4% fee on certain payments above ₹2,000 (roughly $21), a significant shift after years in which merchants processed transactions for free. Consumers will not be charged. The move follows sustained pressure from the payments industry, which has long argued that the zero-fee model, in place since 2020, made it unsustainable to fund the network's rapidly growing running costs.

Small payments of ₹2,000 or less remain free, as do merchants receiving up to ₹100,000 a month through UPI, while fees are capped at ₹300 for transactions of ₹75,000 or more. Certain sectors, including railways, telecom, insurance and fuel, will instead pay a flat ₹5 fee, and capital-market transactions face a 0.02% charge capped at ₹300. UPI is vast in scale, processing 24.51 billion transactions worth about $312 billion in August alone, and NPCI puts the annual cost of running it, covering servers, fraud prevention and support, at around $2.1 billion. NPCI has not disclosed how it calculated that figure or how much revenue the new fees are expected to generate, and commentators have questioned whether the change could erode UPI's reputation for being essentially free to use.