Mumbai: India's payments authority is talking to lenders and payments firms on Tuesday to discuss levying charges on large transactions in the world's largest retail fast-payment system, three sources familiar with the plans told Reuters.
The consultations come after India changed its payments legislation on Monday, allowing firms to charge transactions of more than 2,000 rupees (about $20). All payments using the Unified Payments Interface have been free so far.
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The move will benefit banks and payment firms in Asia's third-largest economy that posted 24 billion UPI payments totalling $311 billion in August.
The agenda for Tuesday's meeting includes the overall fees to be levied on payments to merchants and the split between banks, payment apps and aggregators, two of the three sources said.
Regulatory authorities, including the National Payments Corporation of India and the Reserve Bank of India, are leaning towards a 0.4% charge but the final rate and the split have yet to be decided, the third source said.
The second of the three sources said the banks could get 40% of the fees, with the remainder evenly divided between the payment app and the merchant payment services provider.
While person-to-merchant transactions are expected to be monetized, peer-to-peer transactions will remain free, the sources said.
All the sources requested anonymity as they are not authorized to speak to the media. The NPCI and RBI did not immediately respond to emails seeking comment.
INCHING CLOSER
Introduction of charges on UPI would benefit Paytm and Pine Labs, open an additional revenue source for banks and boost prospects for IPO-bound PhonePe and Razorpay.
Analysts at Jefferies estimate that the fees could generate 50 billion rupees to 100 billion rupees annually for the payments industry.
India's payments landscape is dominated by apps that have received sizeable overseas investment such as Walmart-backed PhonePe, Alphabet's Google Pay, Paytm and Meta-backed CRED.
