Apple Pay launches in India as new UPI charges set to kick in

Apple on Wednesday launched its Apple Pay service in India as the US technology giant enters a market dominated by UPI-based digital payments.

Apple Pay is initially available for Axis Bank-issued Visa and Mastercard credit cards, which users can add to Apple Wallet and use at thousands of stores and online merchants across India.

"India is home to a dynamic and digitally savvy population that continues to embrace a cashless future while expecting the highest standards of security and privacy, and we're so excited to bring Apple Pay to users in India today," Jennifer Bailey, Apple's vice president of Apple Pay and Apple Wallet, said.

Apple Pay allows users to pay at contactless terminals without entering a PIN or OTP at checkout.

Users can also use the service for purchases in apps and on the web without repeatedly entering card, billing and shipping details.

Apple users can double-click the side button or Home button on their iPhone, authenticate using Face ID, Touch ID or a passcode, and hold the device near a contactless payment terminal.

Apple Watch users can similarly hold the watch near the reader.

Apple said the actual card number is neither stored on the device or its servers nor shared with merchants. Instead, a unique Device Account Number is assigned to the card and encrypted and stored in the device's Secure Element.

The company said it does not retain transaction information that can be traced back to users.

Apple Pay will be accepted at millions of merchant locations in India, including Apple Store locations, Blinkit, Chaayos, Croma, Interflora, Ixigo, Le15 Patisserie, Reliance brands, Tata 1mg and Zomato, among others.

Apple has also worked with payment service providers including Cashfree, JusPay, Mswipe, Paytm, PayU, Pine Labs, Razorpay and Worldline to enable the service across their merchant networks.

Axis Bank MD and CEO Amitabh Chaudhry said the launch would provide its credit card customers with greater choice and flexibility across the Visa and Mastercard networks.

The launch comes days before a revised merchant discount rate (MDR) framework for certain high-value UPI transactions takes effect, bringing a charge to a segment of India's otherwise zero-MDR UPI ecosystem.

Under the revised framework, a 0.4% MDR, capped at ₹300 per transaction, will apply to specified P2M UPI transactions above ₹2,000. A flat ₹5 charge will apply to transactions above ₹2,000 in select sectors, including railways, telecommunications, insurance and fuel.

Transactions involving mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02%, also capped at ₹300.

The move comes amid longstanding US concerns over India's zero-MDR framework for UPI and RuPay.

The US Trade Representative has previously argued that the policy creates an uneven playing field for US payment networks such as Visa and Mastercard.

The finance ministry, however, has rejected suggestions that foreign pressure led to the introduction of MDR on UPI.

"Some claims suggest the change is due to foreign influence. This is false," the ministry said in a post on X, adding that India's UPI policy decisions were being made independently with the aim of creating a "self-sustaining, inclusive, and affordable digital payments ecosystem".