The National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI) are meeting with banks and payment companies today. They are discussing a major change: starting to charge fees for large transactions on the Unified Payments Interface (UPI). For years, UPI has been free for everyone, but a recent change in Indian law now allows firms to charge for transactions over ₹2,000.

Currently, UPI is the world's largest fast-payment system for retail users. In August alone, the system handled 24 billion payments worth about $311 billion. Because these transactions are currently free, banks and payment apps do not earn direct income from them. This meeting aims to decide how much to charge and who gets what share of the fee. The goal is to create a sustainable business model for the digital payments industry.

Sources say the authorities are looking at a 0.4 per cent charge on merchant transactions. A merchant transaction is when you pay a shopkeeper or a business rather than a friend. Under the proposed plan, banks might get 40 per cent of this fee. The remaining 60 per cent would be split equally between the payment app, like Google Pay, and the payment service provider that helps the merchant accept the money.

For bank officers, this is a very important development. Currently, banks bear the cost of maintaining the infrastructure for UPI without getting paid. If this fee is implemented, it will create a new and steady stream of revenue for banks. Analysts at Jefferies estimate that the payments industry could earn between ₹5,000 crore and ₹10,000 crore every year from these fees.

It is important to note that not all payments will cost money. The plan only targets person-to-merchant (P2M) payments. Person-to-person (P2P) transfers, like sending money to a family member, will stay free of cost. This ensures that the common person can still use UPI for daily personal needs without worrying about extra charges.

This move will greatly help payment companies like Paytm, Pine Labs, PhonePe, and Razorpay. Many of these firms have received big investments from overseas but struggle to make profits because UPI is free. By allowing charges on large payments, these companies can finally show a clear way to earn money, which is especially important for those planning to launch an Initial Public Offering (IPO - when a company first sells shares to the public).

Indian customers who make large purchases might see a change in how merchants handle payments. While the fee is charged to the merchant, some might try to pass the cost to the buyer. However, for most small daily payments under ₹2,000, nothing will change. The system is designed to keep small retail payments attractive while making large business deals pay their fair share.

The industry is now waiting for an official announcement from the RBI or NPCI. The final rate and the exact split of money between banks and apps are still being discussed. Bankers should watch for official circulars in the coming weeks to understand how to update their internal systems for these new charges.