Archive · 19 Sep 2026
Proposed UPI Fee Puts Infrastructure Needs Against Growth Concerns
UPI lets people and businesses send money instantly through banks.
Small shops and vendors benefit because payments reach their bank accounts quickly.
They also need less cash and get better payment records.
However, UPI sometimes stops working or transactions fail.
About 60% of people surveyed said these were the biggest problems to fix.
The survey included people in cities and rural areas.
A proposed 0.4% fee has raised questions about how to improve the system.
Artha Global said that having no merchant discount rate gives banks and payment companies less financial reason to upgrade the infrastructure.
A proposed 0.4% fee for UPI transactions has prompted debate over infrastructure and growth.
UPI helps small businesses and vendors receive instant bank settlements, reduce cash reliance and maintain better records.
About 60% of respondents in an Artha Global survey identified server downtime and transaction failures as the biggest areas needing improvement.
The survey covered urban and rural markets and was conducted last year.
Artha Global said the zero-MDR regime reduced banks’ and payment providers’ commercial incentive to invest in upgrades.
- Who
- UPI users, including small businesses and vendors, as well as banks and payment service providers, are affected; Artha Global conducted the cited survey.
- What
- A proposed 0.4% UPI fee is being considered amid concerns about server downtime, transaction failures and infrastructure investment.
- When
- The Artha Global survey was conducted last year; no date for the proposed fee is provided.
- Where
- The survey covered urban and rural markets.
- Why
- The issue centers on improving UPI reliability while addressing the lack of commercial incentives for upgrades under the zero-MDR regime.
- Proposed fee
- 0.4% for UPI transactions
- Main reliability problems
- Server downtime and transaction failures
- Survey finding
- About 60% identified reliability issues as the biggest areas needing improvement
- Survey coverage
- Urban and rural markets
- Survey timing
- Conducted last year
- Current pricing regime
- Zero merchant discount rate (MDR)
- Reported consequence
- Banks and payment service providers have less commercial incentive to invest in upgrades