😱 India🇮🇳: following the card-based model, fees may be introduced for merchants using the UPI instant payment system

😱 India🇮🇳: following the card-based model, fees may be introduced for merchants using the UPI instant payment system

Some industry experts argue that the absence of merchant fees limits the network's long-term sustainability, as payment service providers have less incentive to invest in infrastructure and innovation. If the pace of investment slows, UPI's rapid growth could also begin to lose momentum.

➡️ As a general principle, allowing merchants to accept payments free of charge is an effective way to expand a network, but only during the early stages of market development. Eventually, the system needs to generate sufficient revenue to reinvest in its own infrastructure. Analysts point to the United States🇺🇸, where technology companies providing POS platforms and other technological solutions for merchants have prospered because they receive a share of the fees merchants pay to accept payments.

➡️ In India, lawmakers are considering a differentiated approach to introducing fees. For example, they could apply only to transactions above a certain amount or to large merchants, while small businesses and low-value payments would remain exempt.

➡️ It is expected that transaction fees will range from 0.3% to 0.5% on transactions exceeding 2,000 rupees (USD 21).

➡️ Context: UPI is one of the world's largest real-time payment networks. In July, it processed 23.6 billion transactions worth USD 313.5 billion. PhonePe and Google Pay are among the leading providers of UPI payments.

#news #India #USA #UPI

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