India’s instant-payments network is moving toward a funding test after years of free merchant acceptance, with new legislation creating room to revisit charges on some Unified Payments Interface transactions, TechCrunch reported.

The bill does not impose a fee or name the transactions that would carry one.

Its significance is narrower but commercially important: it lays legal groundwork for a potential overhaul of the zero merchant discount rate policy that has governed UPI acceptance since 2020.

The measure remains a policy starting point, not a finished pricing rule.

July UPI Volume Sharpens The Funding Question

UPI has become a daily payments utility in India.

NPCI data cited by TechCrunch put July processing at a record 23.66 billion transactions worth ₹29.88 trillion, about $313.4 billion, showing the scale of a network still supported by a model in which merchants do not pay acceptance fees.

India removed merchant discount rates on UPI transactions in January 2020 to accelerate adoption.

Since then, state incentives have helped support operation and development, while banks and fintech companies have argued that higher volumes also mean higher technology, security and infrastructure costs.

Rau said reaching 90% penetration and expanding UPI globally would require startups, fintechs and banks to keep investing in IT, innovation and cyber security.

His post backed an industry model in which merchants help fund that investment while consumer transfers and peer-to-peer payments remain free.

Analysts Model A Selective Fee Path

The policy points to selective merchant charging rather than a blanket change.

The legislation leaves the details for later, while officials have considered charges for larger merchants instead of all UPI transactions.

Jefferies estimated in a Tuesday report cited by TechCrunch that fees on higher-value UPI transactions could create ₹50 billion to ₹100 billion, or about $525 million to $1.05 billion, in additional annual revenue by fiscal 2028 if charges were set at 15 to 30 basis points.

Bernstein described a similar balance: payments above ₹2,000, about $21, represent roughly 4% of volume yet close to 70% of value.

That split could let policymakers protect small payments while opening a revenue pool for banks and payments companies.

Overseas UPI Markets Add External Stakes

The policy will be watched outside India because UPI is already live in markets including Singapore, the United Arab Emirates and France, according to TechCrunch.

A charging framework at home could shape how Indian payment companies and banks fund cross-border expansion or price services linked to those markets.

The commercial effect would also depend on distribution inside India’s payments stack.

NPCI data cited by TechCrunch showed Walmart-owned PhonePe and Alphabet’s Google Pay together holding nearly 80% of UPI transaction volumes, but the source did not say how any future merchant-fee revenue would be divided among banks, payment apps and other network participants.

The legislation creates room for a fee model, but it does not yet say which transactions would carry it or how the resulting revenue would be divided.