India’s new UPI fee is reviving the case for cash (opens the source in a new tab)
- The FT reports that a 0.4% charge on business UPI Unified Payments Interface: India's instant mobile payment system, run by NPCI. payments above a small threshold is due from November, with person-to-person and small-merchant payments exempt.
- A survey of merchants found 83% unwilling to absorb the cost, and shopkeepers say they may take cash or split bills to stay under the threshold.
- Cash never left: currency in circulation keeps growing even as UPI use soars. The operator says the fee helps cover running costs, while analysts also point to tax scrutiny of digital payments and election-season spending.
- 0.4%
- fee on business UPI payments
- 83%
- of merchants won’t absorb it
Why it matters UPI grew because it cost nothing to use. Someone has to pay for the rails, but a fee that pushes merchants back to cash would undo part of the digital gain.
Other side Small payments stay exempt, and the evidence does not prove the fee alone explains rising cash use. Tax scrutiny, prices and elections all play a part.