India has proposed bringing back merchant fees for a limited set of Unified Payments Interface, or UPI, transactions, marking a potential end to the zero-fee framework that has been in place since January 2020. The government submitted the Taxation and Other Laws (Amendment) Bill to the Lok Sabha on Aug. 4-5, seeking changes to Section 10A of the Payment and Settlement Systems Act, 2007. Under the proposal, banks and payment service providers would be allowed to charge a merchant discount rate of 5 to 7 basis points on specific UPI payments. The fee would apply only to large merchants with annual turnover of roughly 10 million to 15 million rupees, and only for transactions above 2,000 rupees. Person-to-person transfers and transactions involving small merchants would remain free. The government has also set aside 20 billion rupees in subsidies for fiscal 2027. A parliamentary standing committee had earlier said the zero-fee model was not sustainable and that a viable revenue source was needed. The update was cited by CryptoBriefing and carried by Techub.
India has proposed restoring merchant fees for certain Unified Payments Interface, or UPI, transactions, according to a Techub brief citing CryptoBriefing.
The government submitted the Taxation and Other Laws (Amendment) Bill to the Lok Sabha on Aug. 4-5. The bill would amend Section 10A of the Payment and Settlement Systems Act, 2007, allowing banks and payment service providers to levy a merchant discount rate on selected UPI transactions.
The proposed rate is set at 5 to 7 basis points. It would apply only to large merchants handling transactions above 2,000 rupees and with annual turnover of about 10 million to 15 million rupees.
If adopted, the move would end the zero-fee policy that has been in force since January 2020. The government has earmarked 20 billion rupees in subsidies for fiscal 2027, while person-to-person transfers and transactions involving small merchants would remain free.
A parliamentary standing committee had previously said in a report that the zero-fee model was unsustainable and that a workable source of revenue needed to be established.
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