India May Soon Charge Fees for Big Digital Payments

India's government may soon charge a small fee for large digital payments made through its popular UPI system. Officials met with banks and payment companies on Tuesday, September 15, to talk about the plan. UPI, which stands for Unified Payments Interface, is the world's biggest fast-payment system used by regular people every day. Right now, all UPI payments are completely free, but that could be about to change.

India changed its payments law on Monday, allowing companies to charge fees on transactions worth more than 2,000 rupees — about $20. The new rule opens the door for banks and payment apps to earn money from large transfers for the very first time. In August alone, people in India made 24 billion UPI payments adding up to $311 billion, which shows just how widely the system is used.

At Tuesday's meeting, officials discussed how big the fee should be and who would receive a share of it. Regulators are leaning toward a charge of 0.4% on payments over the limit. That means a $20 payment could carry a fee of about 8 cents, though no final decision has been made yet.

Sources say that banks could receive 40% of any fee collected. The rest would be split evenly between the payment app and the company that handles payments for the merchant, or store. Only payments from a person to a business are expected to carry fees, while payments sent between two people would stay free.

Several big companies could benefit if fees are introduced. Apps like PhonePe, backed by Walmart, and Google Pay, owned by Alphabet, are among the most popular UPI platforms in India. Paytm, Pine Labs, and Razorpay could also earn more money under the new rules. Analysts estimate that fees could bring in between 50 billion and 100 billion rupees each year for the payments industry.