NPCI clarifies merchants cannot shift payment processing fees to users

The National Payments Corporation of India (NPCI) has issued a directive stating that merchants are not permitted to pass Unified Payments Interface (UPI) transaction charges onto customers. This clarification enforces existing payment network rules regarding customer-facing fees. Payment network regulations dictate fee-sharing models between acquiring banks, payment gateways, and retail merchants without burdening the payer.

In practice, this prevents businesses from levying extra surcharges at checkout when customers scan QR codes. The old position allowed occasional unauthorized merchant surcharges due to a lack of awareness, whereas the new position explicitly bars merchants from transferring any processing costs to the buyer. Retail businesses and payment aggregators must audit their point-of-sale software and billing systems to ensure compliance with NPCI rules.

Consumers should report any merchant attempting to charge extra for UPI payments to relevant authorities. Bottom line: businesses must absorb payment gateway costs without penalizing customers for using digital rails.