India's payment rail stops being free on 15 October. NPCI's framework, published on 15 September, charges merchants 0.4% on person-to-merchant UPI payments above ₹2,000, capped at ₹300 above ₹75,000. NPCI also publishes the number that bounds it: merchants took ₹8,95,320.68 crore across UPI in August. ₹8,95,320.68 crore × 0.4% = ₹3,581.28 crore a month, ₹42,975 crore a year, or $4.51 billion at the ₹95.24 Reuters used on Tuesday. That is the ceiling for every bank, aggregator and app together, and nobody collects it.
NPCI set four rates, and 17.4% of merchant value is not on the 0.4%
Reuters carried the 0.4%. NPCI's own FAQ carries the rest, and each line cuts the base.
- Below ₹2,000, nothing — "more than 95% of the total volume of UPI (P2M) transactions", by NPCI's count. Volume, not value, and the distinction decides everything below.
- Merchants taking under ₹1 lakh a month pay zero, whatever the ticket size.
- A flat ₹5, not 0.4%, on railways, telecom, insurance, fuel, electricity, water, piped gas and school and university fees.
- 0.02% on mutual funds, stockbrokers, securities dealers and investment platforms.
- Nothing on UPI AutoPay, which is how bills and systematic investments are paid, and nothing on credit lines or RuPay cards on UPI.
NPCI's merchant-category table names four of those for August: telecom ₹23,261.73 crore, fuel ₹44,193.12 crore, utilities ₹24,636.11 crore, securities brokers ₹63,667.21 crore. Together ₹1,55,758.17 crore, 17.4% of merchant UPI value, at a concessional rate or none.
NPCI merchant-category statistics, August 2026; average tickets and shares are ours
| Merchant category | Average ticket | Share of value |
|---|---|---|
| 6211 Securities brokers | Rs 7,569 | 7.1% |
| 7322 Debt collection | Rs 3,441 | 8.3% |
| 4900 Utilities | Rs 1,647 | 2.8% |
| 5541 Service stations | Rs 572 | 4.9% |
| 4814 Telecom | Rs 284 | 2.6% |
| 5411 Groceries | Rs 217 | 9.7% |
| Others, unnamed | Rs 1,367 | 45.5% |
| All merchant UPI | Rs 577 | 100% |
Average ticket is category value divided by category volume. NPCI names the top 29 merchant category codes by volume and clubs the rest into 'Others', which holds 45.5% of merchant value and cannot be resolved further. Railways, insurance and education, all on concessional rates under the MDR framework, are not separately named and sit inside that residual.
Three inputs decide the answer and NPCI publishes none of them
How much merchant value sits above ₹2,000. NPCI publishes merchant volume and value monthly and splits neither by ticket size. The average merchant payment is ₹8,95,320.68 crore ÷ 15,510.01 million = ₹577, and the ">95% of volume" figure caps nothing on the value side.
Who keeps the fee. The merchant pays it to its acquiring bank, and the FAQ says the "fee distribution models" are "decided by the UPI and Services Steering Committee". No split between issuer, acquirer, aggregator and app appears in the document creating the fee.
PhonePe's share of the base. NPCI's app table gives PhonePe ₹14,26,253.67 crore of August's ₹29,82,355.95 crore, 47.8% — attributed to the payer's app, and mixing person-to-person with merchant payments. The fee is charged on the merchant's side. No app-level merchant split is in print.
Bernstein's estimate is 24.4% of the ceiling
Reuters put it at "hundreds of millions of dollars a year", and its body attributes that: Bernstein, up to $1.1 billion a year for payment apps by March 2028, of which PhonePe and Google Pay take about $900 million on market share. Reuters says the pair handled 80% of UPI value last month; NPCI's table says 81.6%, so that part checks.
$1.1 billion ÷ $4.51 billion = 24.4%. The threshold, the exemption, the concessional tiers and the bank and aggregator cut all live inside that 24.4%, and none is published. The estimate may well be right. It cannot be checked.
At Walmart it is 1.29% of operating income
Walmart's 10-K puts its PhonePe ownership at approximately 73% at 31 January 2026, down from about 84% a year earlier after employees exercised options ahead of a possible listing. The 71.77% in press reports is not Walmart's figure. PhonePe is consolidated inside Walmart International, so fee revenue reaches the revenue line with about 27% taken out below.
Run the ceiling down. Give PhonePe 47.8% of $4.51 billion and let it keep every paisa: $2.16 billion, 7.2% of Walmart's $29,825 million of fiscal 2026 operating income, 1.65% of Walmart International's $130.4 billion of net sales. Then take the number circulating. PhonePe is 58.6% of the pair by value, so $527 million of Bernstein's $900 million, and 73% of that is $385 million — 1.29% of operating income, in a year ending March 2028.
Walmart booked a bigger PhonePe number last year. Modifying PhonePe's share-based payments cost $0.7 billion of non-cash expense inside Walmart International, 1.8 times its share of the whole estimate. For scale, Walmart made $9,383 million of operating income in the July quarter alone.
Alphabet is the other named beneficiary and has nowhere to put this. Its reported lines are Search, YouTube ads, Network, subscriptions and devices, Cloud and Other Bets. India payments has no segment, and Alphabet has never sized one.
What would move it
The ₹2,000 threshold and the ₹1 lakh exemption are the fee base, and NPCI says the small-merchant fund behind them will be settled with the RBI "within the next three months". UPI pricing has been withdrawn before. Publish merchant value by ticket band, or the split, and the $4.51 billion becomes checkable. Until then a PhonePe listing is the only event that would put an audited revenue line against it, and Walmart shelved that one in March.
The rate, threshold, cap, ₹1 lakh exemption, flat ₹5 and 0.02% tiers, the AutoPay and credit-line carve-outs, the ">95% of volume" figure and the "fee distribution models" language are from NPCI's FAQ of 15 September 2026. Monthly UPI totals, the merchant and peer-to-peer split, the app-wise table and the merchant-category table are NPCI's published August 2026 statistics; the ceiling and every ratio here are ours, computed from those figures at ₹95.24 to the dollar, the rate Reuters used on 22 September. The $1.1 billion and $900 million are Bernstein estimates for the year to March 2028 as reported by Reuters. Walmart's ownership of PhonePe, the consolidation, operating income, International net sales and the $0.7 billion charge are from its fiscal 2026 annual report, and Alphabet's reported lines from its own segment disclosure.
