By PYMNTS | October 18, 2026
Indian consumers are reportedly increasing their cash usage ahead of new fees on the country’s popular digital payment system.
Beginning next month, the United Payments Interface (UPI) system will apply a small fee on all transactions greater than 2,000 rupees, or around $21.
But as the Financial Times (FT) reported Sunday (Oct. 18), that change isn’t sitting well with Indian businesses. The report cited a survey from polling agency Local Circles showing that 83% of merchants were not willing to bear the additional costs.
The report said this fee could be a blow to the 10-year-old UPI, one of the world’s most widely used digital payments systems.
As FT noted, the launch of UPI coincided with a government effort to take large denomination bills out of circulation. However, use of physical currency has remained popular, with around 2.3 times as much cash in circulation now than 10 years ago.
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“Currency in circulation continues to grow at double-digit rates even as cash’s share of individual transactions declines, thanks to growing digital payment adoption,” Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu told FT, referring to this dynamic as the “cash paradox.”
Meanwhile, uptake of UPI has also soared as a way to pay vendors, cover groceries or restaurant bills, and make money transfers. The platform processed around 242 billion transactions during its latest financial year, a nearly 12,000-fold increase from its first full year of operation, FT said.
UPI and cash use “have grown together,” said Anush Raghavan, chief business officer at CMS Info Systems, India’s biggest cash management company.
“UPI has taken over a large share of small everyday payments, yet on the RBI’s own estimates, cash still funds more than half of consumer spending, and more households now also hold it as a reserve,” he said.
Writing about UPI’s upcoming fee changes earlier this month, PYMNTS examined some of the other routes instant payment systems have taken to fund their operations.
For example, The Clearing House uses its own transaction pricing on the RTP® network, charging participating institutions 4.5 cents to send an inter-participant credit transfer and 1 cent to send a request for payment or remittance advice.
“Network pricing is only one part of the cost of offering instant payments,” that report added, citing research from the PYMNTS Intelligence report “From Adoption to Execution: How FIs Are Turning Real-Time Payments Into Competitive Advantage.”
That research from August found that 76% of financial institutions surveyed already provide RTP network access and 40% have instituted FedNow. The research also found 52% citing legacy technology among their largest modernization hurdles, “as institutions deal with integration, liquidity and round-the-clock operational requirements,” the report added.