Apple Pay will launch in India next month for users of Axis Bank credit cards, Reuters has reported.

Citing three sources familiar with the matter, the newswire said Apple will bring its contactless payment service to India via Axis customers at first, then widen access on a bank-by-bank basis.

India already has a mature digital payments ecosystem, dominated by the National Payments Corporation of India run Unified Payments Interface (UPI). This is the largest digital real-time payment system, facilitating around half of all digital transactions made worldwide and 640 million transactions per day.

Within India, 84 per cent of digital payments are made via UPI per CNBC, with many small merchants place a QR code on their till to let customers quickly pay for products via their phone.

Apple Pay operates on its own infrastructure and has long been missing from the Indian ecosystem due to stringent regulatory requirements including a requirement for card details to be stored within India’s borders.

Google Pay has been available in India since 2017, but within the region it functions as a front-end for UPI. This means Apple Pay is likely compete with contactless card payments rather than existing UPI-based payment options once it launches.

Reuters added that other organisations in contention include India’s largest private sector banks, HDFC Bank and ICICI Bank. The sources spoke on condition of anonymity amid private talks between Apple and Indian lenders.

Axis Bank and ICICI said no comment in reply to Reuters requests for comment, while Apple and HDFC did not respond.

The launch comes amid major changes for UPI, with the government set to impose a 0.4 per cent fee on all UPI consumer to business payments above 2,000 rupees (£15). The Merchant Discount Rate (MDR) will be paid for entirely by businesses, and has been described by the government says as a necessary charge to maintain UPI infrastructure.

The move could drive more businesses to adopt alternative payment methods to circumvent the charge, though the government has said 96 per cent of person-to-merchant transactions will not be affected by MDR. Person-to-person transactions are not covered by the new charge.

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