India has postponed the implementation of a proposed 0.4% fee on large merchant payments made through the Unified Payments Interface (UPI) until after Diwali, the National Payments Corporation of India (NPCI) said on Tuesday.
The fee, applicable to merchant transactions exceeding ₹2,000 ($21), was originally scheduled to come into effect on October 15. NPCI said the decision to defer the rollout was taken “keeping in mind the festive season”. The revised implementation date will be announced separately.
Diwali, which falls on November 8 this year, is one of India's biggest shopping periods, with consumers typically increasing spending on automobiles, clothing, electronics and home appliances. The broader festive season, running from October through December, also sees a significant rise in retail activity.
The proposed charge would mark a departure from more than six years of zero-cost UPI payments in India. The plan had faced opposition from retailers and a major brokerage, raising concerns about the potential impact of transaction fees on businesses and digital payments.
UPI is used by more than 500 million people across India for everyday purchases, ranging from small-value transactions to high-value consumer spending. Walmart-owned PhonePe and Google Pay, owned by Alphabet, together accounted for around 80% of UPI transaction value in August.
The postponement comes as businesses and payment platforms prepare for the annual festive shopping surge, a critical period for India's retail and digital payments ecosystem.
