Archive · 16 Sep 2026
UPI Fee Plan Sparks Fears of Cash’s Return
The Centre plans to charge merchants a small fee on some UPI payments above Rs 2,000.
The fee is planned for person-to-merchant payments from October 15.
Some people think it could help users think more carefully about spending.
Merchants worry that customers may start using cash again.
A sari seller said businesses might raise prices to cover the fee.
Others fear that future charges could affect small shops or person-to-person payments.
The government says the fee would apply to merchants, not customers.
Critics worry that merchants may still pass the cost on to customers.
The Centre plans to levy a 0.4% merchant discount rate on person-to-merchant UPI transactions above Rs 2,000 from October 15.
Some Hyderabad residents said the fee could encourage more mindful spending and money tracking.
Merchants warned that customers may return to cash or face higher prices.
Critics feared the fee could spread to smaller businesses and eventually affect person-to-person payments.
Former finance minister P. Chidambaram said merchants might pass the charge to customers, as happens with some credit-card payments.
- Who
- The Centre, Hyderabad residents, merchants, and former finance minister P. Chidambaram.
- What
- A 0.4% merchant discount rate is planned for person-to-merchant UPI transactions above Rs 2,000.
- When
- From October 15; the year is not specified in the article.
- Where
- Hyderabad and Secunderabad, with implications discussed for businesses more broadly.
- Why
- The Centre has decided to levy the merchant discount rate on qualifying UPI transactions; the article does not state a further rationale.
Supporters and Cautious Optimists
Merchants and Critics
Effect on spending
Supporters and Cautious Optimists
The fee could make people more mindful of UPI use, track their money, and spend more responsibly.
Merchants and Critics
The change could discourage digital payments and push people back toward cash.
Impact on merchants
Supporters and Cautious Optimists
Keeping charges limited and transparent could preserve the convenience of digital payments.
Merchants and Critics
Merchants may have to absorb the cost or increase prices, particularly for higher-value transactions.
Future expansion
Supporters and Cautious Optimists
The announced measure applies to merchants and transactions above Rs 2,000, rather than customer or person-to-person payments.
Merchants and Critics
Some people fear future fees could reach person-to-person payments and small businesses, while P. Chidambaram warned merchants may pass charges to customers.
- Fee rate
- 0.4%
- Affected payments
- Person-to-merchant UPI transactions
- Transaction threshold
- Above Rs 2,000
- Start date
- October 15
- Who is charged
- Merchants, according to the government’s position
- Main concern
- Merchants may pass the cost to customers or encourage a return to cash
- Merchant example
- Some sari payments can range from Rs 1 lakh to Rs 2 lakh