From drinking tea to buying gold, everything today has been digitized. The sight of a vegetable seller’s grandmother saying, “I don’t have change, just GPay it,” and displaying a QR code has come to symbolize “Digital India.” These digital payment transactions, which came into full public use from 2016 onward, were made easily accessible to people through the introduction of foreign apps like PhonePe and GPay. The value of financial transactions, which was just Rs. 0.07 lakh crore in 2016–17, has increased nearly 12,000 times to Rs. 314.23 lakh crore in the 2025–26 financial year.
At this stage, the National Payments Corporation of India (NPCI) issued an important announcement a few days ago regarding UPI transactions. Accordingly, “all transactions for person-to-person money transfers, consumer-to-merchant transactions up to Rs. 2,000, and for street vendors and small businesses that receive payments via QR code up to Rs. 1 lakh per month will continue to be free of charge.
However, for transactions made by consumers to merchants above Rs. 2,000, a 0.4% fee will be imposed on merchants. For transactions of Rs. 75,000 and above, this fee has been capped at a maximum of Rs. 300.
It has been stated that a fixed fee of Rs. 5 will be charged for transactions above Rs. 2,000 in essential sectors such as railways, telecommunications, fuel, and insurance. For transactions related to mutual funds and the stock market, a maximum fee of Rs. 300 will apply. This fee will be shared between banks and UPI app companies to improve their systems."
To discuss in detail the fee currently imposed on merchants’ UPI transactions, we contacted C.P. Krishnan, vice president of the Tamil Nadu Indian Bank Employees Federation.
He said, ``Notifications have now been issued to charge fees for UPI transactions, which were initially introduced completely free of cost. Small and retail traders who do business up to Rs. 1 lakh can earn only a maximum profit of 10% to 15%, that is, only up to Rs. 15,000. Even such poor traders will be charged for transactions above Rs. 2,000.
As a result, these small business owners will be pushed to avoid using UPI transactions and return to cash transactions.
In India, the urban-rural divide and the gap between the rich and the poor are already wide. After the demonetization drive in 2017, the cash circulation in the country stood at Rs. 9 lakh crore. But now, it has increased to Rs. 42 lakh crore.
When people are pushed back toward cash transactions, the amount of money that accumulates with the wealthy as black money will increase. The government’s costs for printing new currency notes again will also rise significantly. Therefore, at a time when the country is advancing digitally, going back to the old system is the wrong approach.
The government has imposed and forced digital transactions on the people. For example, a 70-year-old auto driver who came to me said, “All the passengers who come ask whether I have GPay. Without a QR code, it’s hard to get rides properly.” If he wants to make a proper living, he has been forced to spend Rs. 5,000 to buy a smartphone, pay Rs. 200 a month for data, open a bank account, get a debit card, and start a GPay account. Therefore, the current practice of suddenly collecting charges will severely affect small traders.
To put it more clearly, just as people cannot be separately taxed for making money transactions in the first place, cash-equivalent digital money transactions should also not be subject to tax or fees.
Most of the country’s customers hold accounts only with 12 major public sector banks such as State Bank of India (SBI), Canara Bank, and Indian Bank. Although banks like SBI and ICICI have their own UPI apps, the government has not properly promoted or encouraged them. As a result, foreign/private companies like GPay and PhonePe have captured 90% of the market share. All public sector banks together are not even handling 1% of digital transactions. This did not happen by chance; it was deliberately created for private companies.
At present in the country, permanent jobs have been eliminated, people’s incomes have declined, and individuals have been forced to do multiple jobs just to survive. In this situation, when UPI charges increase, they will indirectly, or through other means, further severely affect the livelihoods of ordinary people and the cost of living.
Therefore, in keeping with the proverb that even if one cannot do good, one should at least avoid causing harm, the government should refrain from troubling the people. This UPI fee hike law should be put on hold instead of being implemented immediately. This law should be sent to a parliamentary select committee, and a democratic review should be conducted by seeking opinions from the public and the opposition parties,” he has noted.