India has introduced new legislation laying the legal groundwork to overhaul the zero-fee model underpinning its Unified Payments Interface (UPI), potentially allowing merchants to be charged on some transactions for the first time since fees were scrapped in January 2020. The move follows years of disagreement between the finance ministry, the central bank and payment companies over how to sustainably fund the network as transaction volumes and infrastructure costs have soared, with industry figures such as Pine Labs' chief executive welcoming the change as necessary to fund continued investment and international expansion.

UPI processed a record 23.66 billion transactions worth around $313.4 billion in July alone. The legislation does not itself set fees or specify affected transactions, but analysts at Jefferies estimate merchant charges on higher-value payments could generate $525 million to $1.05 billion in additional annual revenue by fiscal 2028, while reports suggest officials may limit charges to larger merchants or transactions above roughly $21, which account for a small share of volume but most transaction value. The change will be watched closely by other countries using UPI, including Singapore, the UAE and France, and could significantly affect PhonePe and Google Pay, which together handle nearly 80% of UPI transactions.