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Morning Edition · Sunday, October 18, 2026Published at 1:07 AM EDT · New York
India delays its UPI merchant fee as cash use rebounds ahead of Jio's share sale
The National Payments Corporation of India postponed a 0.4% charge on some payments above Rs 2,000 until after Diwali, and Jio Platforms opens its initial public offering on October 21.
India has built one of the world's largest digital payment systems, and yet cash use is rising again. The Financial Times reported that the informal economy is driving demand for physical currency. It also warned that a new charge could reduce the popularity of the Unified Payments Interface (UPI), the government-backed instant payment system.
That charge has now been deferred. The National Payments Corporation of India (NPCI), which runs UPI, had planned to start charging merchants on October 15. It set the rate at 0.4% on select merchant payments above Rs 2,000. It postponed the start until after the Diwali festival season and has not announced a new date.
Capital markets face a large test in the same week. Jio Platforms, Reliance Industries' telecom and digital arm, opens its share sale on October 21. Brokerage Groww lists the offering at ₹30,213 crore with a price band of ₹1,065 to ₹1,119 per share and says it could become India's largest IPO. Mint's preview of the week also points to foreign-exchange reserve data and second-quarter earnings.
Part of a tracked trend
Cash Persists Against Digital Rails
As governments move payments onto traceable digital systems and attach fees or tax visibility to them, informal economies keep returning to cash, which limits how far states can monitor money.
What this means
A fee on digital payments changes the merchant's choice. If cash is free and leaves no record for the tax authorities, informal businesses have reason to go back to it, and the state loses the visibility that digital payments gave it. The decision to defer shows the government values UPI's adoption and its data over the fee revenue that payment companies want. The precedent is the 2016 demonetisation. It removed most banknotes overnight, yet cash in circulation regained its earlier level within about two years and kept growing. Indian households and small firms have shown they keep cash when they can. The likelier outcome is that NPCI narrows the fee's scope or delays it again rather than imposing it broadly after Diwali, because the political cost of slowing UPI is larger than the revenue. The read would be wrong if NPCI sets a firm post-Diwali date and keeps the 0.4% rate. That would show the payment companies' commercial interests now outweigh the push for adoption.
What to watch
- NPCI's announcement of a new start date for the merchant fee. A narrower scope would confirm the government's priority on adoption over revenue.
- Subscription levels for the Jio offering. Strong demand from domestic retail investors would show local savings can absorb very large listings without foreign buyers.
- Reserve Bank of India data on currency in circulation over the festive season. Growth above recent trends would confirm the shift back to cash.
Observations to monitor, not financial advice.
Synthesized from: Financial Times · Mint · Mint
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