India opens door to fees on large UPI payments

Elderly vendor in Pahur, India, managing a local small business stall. File photo.

NEW DELHI — September 15, 2026

India has changed its payments rules to allow banks to potentially charge fees on larger transactions made through the country's widely used Unified Payments Interface, or UPI. Payments of up to 2,000 rupees ($20.93) will remain protected from bank charges under the new rules.

The change modifies an earlier provision that prevented banks from imposing fees on UPI digital payments. However, the government has not yet decided whether charges will actually be introduced or how any fees would be calculated.

UPI is operated by the National Payments Corporation of India and has become one of the world's largest instant retail payment systems by transaction volume. The system processed 24.51 billion transactions worth 29.82 trillion rupees in August, highlighting its central role in India's digital economy.

The revised rules could create a new source of revenue for banks and payment service providers if charges are eventually introduced on larger transactions. Government officials have previously said that any such fees would be paid by merchants rather than consumers.

Financial services firm Jefferies estimated in August that merchant fees on larger UPI transactions could generate between 50 billion and 100 billion rupees a year for the payments industry. The actual amount would depend on the structure and level of any charges adopted by authorities.

UPI payments of 2,000 rupees or less will continue to be free of bank charges. The government has not indicated that consumers would directly pay fees on larger transactions.

The potential change could affect India's large digital payments industry, where UPI has expanded rapidly since its launch about a decade ago. Google Pay and Walmart-backed PhonePe together accounted for around three-quarters of UPI transaction volumes in August.

The revised rules do not apply in the same way to payments made using debit cards on India's domestic RuPay network, which will continue to remain free.

The government is therefore leaving the door open to a significant change in how India's UPI system is financed, while keeping smaller digital payments protected from charges. A final decision on whether to introduce fees remains pending.