India postpones UPI payment fee rollout until after Diwali festival

By Ashwin Manikandan

MUMBAI, Oct 13 (Reuters) - India has postponed the rollout of a fee on large payments via its popular Unified Payments Interface platform until after the Diwali festival, the National Payments Corporation of India said on Tuesday.

The 0.4% charge for merchants on transactions exceeding 2,000 rupees ($21) was scheduled to take effect on October 15.

The deferral is "keeping in mind the festive season", and the fee will be implemented immediately after the Hindu festival on a date that will be notified separately, NPCI said in a statement.

Diwali, which will be celebrated across India on November 8, typically marks the peak of consumer spending in Asia's third-largest economy, with shoppers splurging on cars, clothes and home appliances.

The proposed fee, which would end more than six years of zero-cost UPI payments in India, had drawn opposition from retailers and ​a large broker.

UPI is used by over 500 million people ⁠to buy everything from cups of tea to iPhones. Walmart's WMT.O PhonePe and Alphabet's GOOGL.O Google Pay had about 80% market ​share by value of UPI transactions in August.

The fee would have coincided with India's annual festive season that runs ​from October through December and typically sees a surge in consumer ​spending.

The delay in implementation would likely allow payments firms to upgrade systems and not pass on costs to customers, while addressing ​issues that retailers may ​face during the ⁠festive period, Reuters reported last week, citing sources.

($1 = 95.2200 Indian rupees)