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Business
Economic think tank urges government to withdraw proposed UPI fee
✍️ Livemint
🗓 11 Oct 2026, 09:38 AM
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A leading Indian economic think tank has called on the government to scrap the recently announced charges on Unified Payments Interface (UPI) transactions, arguing they could hinder digital payments growth.
An Indian economic think tank has publicly recommended that the Union government abandon the recently proposed levy on Unified Payments Interface (UPI) transactions. The recommendation was outlined in a policy brief released on Monday, citing concerns over the potential impact on the country's digital payments ecosystem.
The brief argues that imposing a per‑transaction fee could raise costs for merchants and consumers, reduce the volume of low‑value payments, and undermine the government's goal of achieving a cash‑less economy. It also points out that UPI has been instrumental in driving financial inclusion, especially in tier‑2 and tier‑3 cities.
The think tank notes that the current model, where banks absorb the cost, has kept transaction fees near zero, encouraging widespread adoption. It warns that a fee could push users back to cash or alternative platforms, eroding the market share that UPI enjoys.
While the government has not yet responded, officials have previously indicated that the fee is intended to offset infrastructure costs and generate revenue. The think tank urges a review of the proposal, suggesting that any cost recovery be pursued through other mechanisms that do not jeopardize the growth trajectory of digital payments.
The brief argues that imposing a per‑transaction fee could raise costs for merchants and consumers, reduce the volume of low‑value payments, and undermine the government's goal of achieving a cash‑less economy. It also points out that UPI has been instrumental in driving financial inclusion, especially in tier‑2 and tier‑3 cities.
The think tank notes that the current model, where banks absorb the cost, has kept transaction fees near zero, encouraging widespread adoption. It warns that a fee could push users back to cash or alternative platforms, eroding the market share that UPI enjoys.
While the government has not yet responded, officials have previously indicated that the fee is intended to offset infrastructure costs and generate revenue. The think tank urges a review of the proposal, suggesting that any cost recovery be pursued through other mechanisms that do not jeopardize the growth trajectory of digital payments.