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India delays digital payments fee rollout amid retailer pushback
India has postponed the implementation of a new 0.4% merchant fee on digital payments, originally set for October 15, due to widespread pushback from retailers. The delay, announced by the National Payments Corporation of India (NPCI), is aimed at avoiding disruption during the festive shopping season and will be rescheduled for after Diwali.
Key points
- NPCI announced a new 0.4% fee on digital payment transactions exceeding ₹2,000.
- Merchants expressed strong opposition, some considering halting UPI payments.
- The fee, intended to support the UPI ecosystem's operating costs, marks a shift from several years of free transactions.
- The implementation was initially planned for October 15, but has been delayed due to the festive shopping season.
- UPI processed 24.07 billion transactions worth ₹29.37 trillion in September, highlighting its importance.
Why it matters
- The delay reflects concerns about the sustainability of digital payment systems in light of ongoing retailer pushback.
- UPI's growth has been supported by government policies reducing transaction costs to encourage digital payments.
- As digital payments become more integral, balancing profitability with accessibility remains a significant trend in IT.
The postponement of the merchant fee indicates the delicate balance between advancing digital payment infrastructure and addressing stakeholder concerns, particularly during critical economic periods like festive seasons.