India built the world’s biggest digital payments miracle. Now comes the bill

BBC:

For most Indians, paying by Unified Payments Interface (UPI) has become almost absurdly routine.

Scan a QR code, tap a few buttons and the money moves instantly. There is no card machine, no cash, and – most importantly – for the user, no visible fee.

That may be about to change.

India has paved the way for banks and payment companies to charge merchants a fee on UPI transactions, potentially ending a decade-long experiment in free digital payments.

The government has yet to decide the rate or exactly where it will apply, but proposals under discussion include a merchant discount rate (MDR) of 0.3-0.5% – a small fee paid by a business to the banks and payment companies that process its UPI payments – on larger transactions at big businesses.

The government says consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free.

The question is whether putting a price on UPI could weaken the network that made it such a success.

The stakes are enormous. Launched in 2016, UPI has grown into one of the world’s biggest real-time payment networks.