World · India Bureau
India's UPI needs domestic reform, not external pressure, experts say
Policy experts argue that India should reform its Unified Payments Interface on its own terms, distinguishing between peer-to-peer transactions and commercial platforms. The debate centres on whether large businesses should bear transaction costs while keeping individual transfers free.
LSN India ·
India's Unified Payments Interface has become a global success story, processing billions of transactions daily and serving as a model for digital payments in emerging economies. However, a growing chorus of domestic experts contends that UPI requires structural reforms driven by Indian policy considerations rather than external pressure from trading partners or international bodies.
The core issue involves the current fee structure, which keeps peer-to-peer and small merchant transactions free while generating little revenue for the system's operators and participants. Observers suggest that India should consider a differentiated approach: maintaining zero charges for individual-to-individual transfers and small retailers while introducing modest transaction fees of around 0.5 per cent on large commercial platforms.
This tiered system would address sustainability concerns while preserving UPI's foundational mission of financial inclusion. The distinction recognizes that mom-and-pop merchants and ordinary citizens benefit from free payments, while large corporations using the infrastructure for high-volume transactions can absorb minimal charges.
Experts emphasize that any reforms to UPI's fee structure should emerge from domestic analysis of the system's long-term viability and India's financial objectives, not as a response to international complaints about unfair competitive advantages. The approach underscores India's broader assertion of sovereignty in designing its own digital financial ecosystem according to local priorities and conditions.