National Payments Corporation of India Informs Supreme Court That Merchants Are Barred From Levying UPI Surcharges

The NPCI (National Payments Corporation of India) has informed the Supreme Court that merchants cannot pass UPI (Unified Payments Interface) charges to customers. This submission clarifies the regulatory stance on transaction fees within the retail digital payments ecosystem, reinforcing the framework that prohibits businesses from levying extra surcharges on end-users for utilizing the payment rail. Digital payment rails in India operate under specific regulatory guidelines designed to promote financial inclusion and digital adoption by keeping transactions free or low-cost for consumers.

In practice, some merchants attempt to recover payment gateway or processing costs from buyers at the point of sale. The NPCI's clarification maintains the established position that consumer transactions must remain free from hidden fees imposed by commercial establishments. Merchants, retailers, and payment service providers must review their point-of-sale billing practices to ensure full compliance with the directive against levying UPI surcharges.

Tax professionals and business advisors should inform retail clients that adding unauthorized customer fees invites regulatory penalties and consumer disputes. Bottom line: strict adherence to merchant discounting rules protects consumers and preserves trust in digital payment infrastructure.