Merchants to Absorb UPI Fees, No Extra GST for Consumers
In a decisive step to sustain the allure of digital payments, the Indian government has resolved that merchants will bear the costs of UPI transaction fees, with no additional GST burden to be shifted onto consumers. This decision comes as a relief to users who have grown accustomed to the convenience and cost-free nature of UPI payments.
While there has been some chatter about introducing UPI fees, the government remains firm in its stance to prevent such charges from being passed on to consumers. A cap has been placed on fees for transactions of ₹75,000 or more, with smaller transactions remaining free for merchants. This ensures that the ease and affordability of UPI payments are not compromised, particularly for small merchants and consumers.
The government's decision reflects a keen understanding of the digital payment landscape, where any additional costs to consumers could deter the widespread adoption of UPI. The move also aligns with the broader objective of promoting digital transactions in the country, which have seen exponential growth over the past few years.
A senior industry figure noted, "The industry is in no mood to pass on GST right now as this may have a worse effect than you bearing the cost right now." The sentiment captures the prevailing view that the long-term benefits of maintaining consumer trust and transaction volume outweigh the immediate impact on merchants' bottom lines.
For small merchants, especially those with monthly UPI transactions under ₹100,000, the assurance of no charges is a significant relief. This policy is likely to encourage even greater participation in the digital economy, fostering growth and innovation.
As India continues to push towards a more digitised economy, the government's approach underscores its commitment to ensuring that digital payments remain accessible and affordable for all.
