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Should You Upgrade to the iPhone 14? Not So Fast

You may want to think twice before upgrading to the iPhone 14 right now.

You might be eyeballing the iPhone 14 lineup — especially the Pro, which introduces a sharper camera and an always-on display. But if you don’t absolutely need a new phone right now, you’re better off waiting. 

Apple usually announces new iPhones in September, which means the rumored iPhone 15 and iPhone 15 Pro could be right around the corner. Those phones are expected to come with USB-C charging for the first time among other notable changes, such as solid state buttons on the Pro models. Apple sometimes discounts older iPhones after introducing new ones, as it did with the iPhone 13 lineup last year and may do the same with the iPhone 14 this year. So whether you care about having the newest iPhone or not, it’s probably in your best interest to wait a little while longer.

Purchasing decisions will always vary depending on budget, how well your phone works right now and your personal needs, so there’s no simple answer that works for everyone. But if you’re in need of a new phone right away and can’t wait, here are the biggest differences between the iPhone 14 lineup and previous iPhone generations to help you make a decision.

What’s new in the iPhone 14

The $799 (£849, AU$1,399) iPhone 14 brought modest improvements but not game-changing ones. Those changes include nitty-gritty camera improvements and the support for satellite-based emergency messaging. 

The iPhone 14 also has a new internal design, with simpler access to internal components, making it easier to repair than previous models. iFixit, a website that disassembles tech products and assesses how easy they are to fix, called it “the most repairable iPhone in years.” And if you want these features in a larger size, the iPhone 14 Plus starts at $100 more, at $899.

Apple saved its most interesting new features for the Pro lineup, including the Dynamic Island that replaces the notch, the new A16 Bionic processor and a 48-megapixel main camera sensor.

iPhone 13 leaning against surface

iPhone 14 vs. iPhone 13, 13 Pro, 13 Pro Max

The iPhone 14 lineup introduced new features such as car-crash detection, the removal of the physical SIM card for US phones, and enhanced cameras on the rear and front. Despite those changes, iPhone 14 isn’t different enough to justify upgrading from the iPhone 13. And even though Apple finally got rid of the infamous notch in the Pro models, the 14 and 14 Plus still have one — it’s the same smaller notch that debuted on the iPhone 13 series. In fact, the iPhone 14 represents “one of the most minimal year-over-year upgrades in Apple’s history,” according to CNET’s Patrick Holland, who reviewed Apple’s latest phones. 

The iPhone 14 and iPhone 14 Plus have the A15 Bionic chip from iPhone 13 Pro and iPhone 13 Pro Max. The 14’s screen looks exactly like the one on the 13. Perhaps the most prominent change was the introduction of a larger version of the iPhone 14 called the iPhone 14 Plus, which has a 6.7-inch screen like the Pro Max. That means you no longer have to splurge on Apple’s most expensive iPhone if you want the largest screen possible. 

Of course, the iPhone 14 is still highly rated, but we recommend skipping this upgrade. If you need a new iPhone and can’t wait for the iPhone 15, we suggest going for an iPhone 14 Pro or iPhone 14 Pro Max if you can afford it. These phones are expensive, but provide access to some salient changes — namely a high-refresh rate display, Apple’s new Dynamic Island multitasking bar, an always-on display as well as better cameras among other features.

The bottom line: If you have an iPhone 13 or 13 Pro, don’t upgrade to the iPhone 14. But if you are determined to get a new phone, go for the iPhone 14 Pro or 14 Pro Max, especially if you must have the Dynamic Island right now. 

Read more: iPhone 14 Pro and 14 Pro Max Review

The purple iPhone 12

iPhone 14 vs. iPhone 12, 12 Pro 

Even though the iPhone 12 lineup was released in 2020, it still shares many similarities with Apple’s latest phones. Both the iPhone 12 and iPhone 14 support 5G, run on fast processors, offer great cameras and include MagSafe accessory compatibility.

Since the iPhone 14 is more of a refresh than a major upgrade, we recommend hanging onto your iPhone 12 if it’s still in good condition and waiting for the iPhone 15. You can still take advantage of the iPhone’s latest software when iOS 17 comes out in the fall, bringing new features like Standby mode for turning your phone into a mini smart display and improvements to the messaging app among other additions.

The iPhone 14 received a few notable camera upgrades, like a larger sensor, a new lens with a faster aperture, improved photo processing and Action Mode which makes the movements in videos look smoother when you record them.

But the iPhone 12’s cameras remain excellent even though they are almost 3 years old. The iPhone 12 has a 12-megapixel dual camera system, while the iPhone 12 Pro includes a third camera with a telephoto lens. Check out our iPhone 12 review to see how the cameras held up when CNET put them through the paces.

It’s worth remembering that you get more noticeable upgrades with the iPhone 14 Pro and Pro Max. These include everything that’s new in the 14, as well as an upgraded main camera with a larger 48-megapixel sensor, an ultrawide camera that allows you to take Macro photos and a third camera with a telephoto lens. If you can get a good trade-in deal that significantly knocks down the iPhone 14 Pro’s price, upgrading from the regular iPhone 12 is a decent step-up. 

The bottom line: You should wait for the iPhone 15 since the iPhone 14 isn’t dramatically different. However, the iPhone 14 Pro and 14 Pro Max bring more significant changes that could be worthwhile if you can snag a good trade-in deal. 

Read more: All The “New” iPhone Features That Have Been on Android For Years

The iPhone 11.

iPhone 14 vs. iPhone 11, 11 Pro

If you’re using an iPhone 11, we recommend upgrading. Since Apple’s new iPhones may be right around the corner, you should still wait a little longer if you can. But if you do need a new phone right now and can get the iPhone 14 at a solid trade-in discount, there are plenty of improvements to look forward to.

In the last three or so years, Apple has made enough changes to features including battery life, performance, screen quality, cameras and durability to merit buying a new iPhone. 

Upgrading to the iPhone 14 will get you 5G support, more storage (128GB at the base level versus 64GB) a better main camera with a wider aperture lens, new video shooting options like Action mode and Cinematic mode, a better selfie camera with Night mode and Apple’s Photonic Engine processing, compatibility with Apple’s MagSafe accessories, longer battery life and faster performance. That’s in addition to car-crash detection and Apple’s new emergency satellite messaging feature. 

Most of the photography and videography improvements are dramatic changes compared to the iPhone 11. And the longer battery life and additional storage space are welcomed upgrades that you’ll notice on a daily basis.

As previously mentioned, if you go for the 14 Pro instead, you get a new 48-megapixel main camera, a closer 3x optical zoom versus the 11 Pro Max’s 2x zoom, the Dynamic Island instead of the notch and numerous other upgrades like an always-on display.

The bottom line: The iPhone 14 lineup includes enough changes to justify upgrading from the iPhone 11. But if your phone is still in good condition and you’re satisfied with it, wait a little while longer for the iPhone 15 (or a newly discounted iPhone 14).

The iPhone XS

iPhone 14 vs. iPhone XS, XS Max, XR

If you bought the iPhone XS, XS Max or XR at launch, that means your phone is almost 5 years old and is probably starting to feel sluggish. That alone makes a strong case for upgrading, but you should probably still wait for the iPhone 15 if you can.

However, if you need a new phone right now, there’s plenty to gain from upgrading. Compared to the iPhone XS, the iPhone 14 provides six hours of additional battery life (according to Apple’s estimates). In addition to everything that’s new in the iPhone 14 specifically, you’ll also get other upgrades Apple has added to the iPhone over the past few years. 

Those include 5G support, more storage (again, you get 128GB versus 64GB), faster performance and a better camera. The iPhone XS generation lacks Night mode for taking clearer pictures in the dark, and it also doesn’t have Deep Fusion, which is Apple’s name for its image processing technique that improves detail and clarity in darker environments. The XS’s front camera has a lower 7-megapixel resolution compared to the larger and newer 12-megapixel sensor on the iPhone 14. If you’re upgrading from an iPhone XR, you’ll also get an additional camera with an ultrawide lens for taking broader group shots for the first time. 

The iPhone 14 also has a larger 6.1-inch screen compared to the iPhone XS’ 5.8-inch display (the iPhone XS Max has a 6.5-inch screen, while the XR’s screen is also 6.1 inches). The design has also changed quite a bit over the past four years; newer models have flat edges, a slightly smaller notch, different finishes and a new “squircle”-shaped camera module that replaces the pill-shaped rear camera cutout. So your phone will not only feel more modern, but it’ll look newer, too. 

The bottom line: If you have an iPhone XS, XS Max or XR, it’s definitely worth upgrading. You get a noticeable boost in camera quality, battery life and performance among other areas. But again, remember that the iPhone 15 and a newly discounted iPhone 14 may be arriving in just a few weeks.

The iPhone X

iPhone 14 vs. iPhone X

The iPhone X is almost 6 years old, which means it probably feels slow and its battery life isn’t what it used to be. With an iPhone 14, you’ll notice a major upgrade in both categories, as well as design, improved durability, connectivity and camera quality. But if you’re in a position to do so, you should wait and see what the expected iPhone 15 has to offer.

If you can’t wait until September, which is when Apple typically releases new iPhones, here’s what you’ll get by upgrading to the iPhone 14. The iPhone X runs on a much older A11 Bionic chip that’s now roughly 6 years old, while the iPhone 14 runs on Apple’s much more recent A15 Bionic processor. The iPhone 14 Pro and Pro Max run on Apple’s newer A16 Bionic chip. Both new processors are way ahead of the A11 chip, which only has a two-core neural engine compared to the A15 Bionic’s 16-core neural engine. 

The iPhone’s neural engine powers tasks that rely on machine learning and artificial intelligence, which are becoming a bigger part of the iPhone experience. Things like app suggestions in the App Library and Apple’s Translate app rely on machine learning to function, which indicates that the iPhone X may struggle to keep up with newer capabilities.

The iPhone X also has a dual-lens camera similar to that of the iPhone XS, meaning it’s missing the iPhone 14’s camera hardware improvements in addition to Night mode, Deep Fusion and the ability to control depth-of-field and blur levels in Portrait mode. Like the iPhone XS, you’re only getting a 7-megapixel front camera compared to a 12-megapixel selfie camera on Apple’s newer phones.

Apple’s more than five-year-old iPhone also has shorter battery life, with Apple estimating it should last for 13 hours when playing back video compared to 20 hours on the iPhone 14. The iPhone 14’s 6.1-inch screen is bigger than the 5.8-inch display on the iPhone X, and it should also be brighter since it can reach 800 nits of max brightness compared to the iPhone X’s 625-nit screen.

The iPhone 14 supports Dolby Atmos and spatial audio playback, while the iPhone X just has stereo playback. That’s probably not a deal-breaker, but might be crucial if you watch a lot of video on your phone without headphones.

And of course, there’s the benefit of getting car-crash detection, Apple’s new emergency SOS messaging via satellite option, better water resistance (up to 6 meters for 30 minutes versus 1 meter), 5G support, more storage space, Ceramic Shield for the display, a refreshed design and the option to use MagSafe accessories on the iPhone 14.

The bottom line: If you have the iPhone X, it’s time to upgrade. The iPhone 14 will feel new in just about every way, from the camera to performance, battery life and the way it looks and feels. And the iPhone X doesn’t support Apple’s upcoming software upgrade, iOS 17, so you’ll be missing out on new features. But if you’ve waited this long, it’s a good idea to hang in there just a little longer for the expected iPhone 15.

iPhone 8 and iPhone 8 Plus

iPhone 14 vs. iPhone 8, 8 Plus

The iPhone 8 generation has Apple’s legacy iPhone design, which is fitting for a phone that’s now almost 6 years old. If you have an iPhone 8 and are considering an upgrade, many of the reasons to do that are the same as the reasons to upgrade from the iPhone X. The processor is getting old, which could make it harder to use newer iPhone features that rely on machine learning. The cameras are outdated and lack features like Night mode (the smaller iPhone 8 doesn’t have Portrait mode either, since it only has one lens). And it doesn’t support iOS 17. By upgrading, you’ll get more storage, significantly longer battery life, new software, support for 5G connectivity and MagSafe accessories, too.

Again, remember that the iPhone 15 could debut next month, meaning it’s a good idea to wait if you can. But if you need a new phone immediately, the biggest difference you’ll notice by upgrading to the iPhone 14 comes down to design, which is much more than just an aesthetic upgrade. Phones with Apple’s more modern edge-to-edge screen trade Touch ID for Face ID, which lets you unlock your phone and authenticate payments just by looking at your device. If you prefer Touch ID over Face ID, especially since it’s difficult to use Face ID while wearing a mask, you might want to at least consider upgrading to the $429 iPhone SE, since it has the same processor as the iPhone 13, 5G compatibility and plenty of photography improvements inside a similar body to the iPhone 8.

Upgrading to the iPhone 14 has a noticeably large jump in display size and quality. Since newer phones like the iPhone 14 don’t have a home button, there’s more room for Apple to expand the screen without making the device feel cumbersome. The iPhone 14’s screen is even larger than the iPhone 8 Plus’ 5.5-inch screen despite the device itself feeling more compact. (And for more perspective, consider that the iPhone 13 Mini has a 5.4-inch display). If you go for the 14 Pro you get another big change: the Dynamic Island, which transforms the notch area into an area for viewing alerts, system notifications and apps running in the background like Spotify or Apple Music. 

From personal experience, switching from an iPhone 8 (which has a 4.7-inch screen) to the iPhone 12’s 6.1-inch display makes reading, checking email and watching videos much more comfortable. The screen isn’t only larger, but it’s also more vibrant with better contrast since it uses an OLED display rather than LCD.

The bottom line: The iPhone 14 is a huge jump from the iPhone 8. Everything about this phone will feel fast and new: the much larger and bolder screen, Face ID, the speedier processor, its longer battery life and of course the substantially upgraded cameras. Of note however, if you really want to get a newer iPhone but keep the iPhone 8’s design, trade up to the current 2022 iPhone SE. And remember that the iPhone 15 and a newly discounted iPhone 14 could be arriving soon, so it’s wise to wait a little longer if possible.

The iPhone 7 Plus and 7.

iPhone 14 vs. iPhone 7, 7 Plus

If you have an iPhone 7, it’s time to upgrade. It’s almost 7 years old, and it shows in everything from the processor to the camera and storage space. The iPhone 7 doesn’t support iOS 17, providing another incentive for acquiring a newer device. If you can’t afford to wait for the iPhone 15, which is expected to debut in September, here’s what you’ll get by upgrading to the iPhone 14.

While we generally recommend choosing the iPhone 14 Pro over the iPhone 14 in most cases, coming from a phone this old, means you’ll find plenty that’s new in the iPhone 14. 

The iPhone 7 runs on an aging A10 Fusion processor, which doesn’t even have a neural engine and is years behind Apple’s latest technology. It has a single-lens camera without Portrait mode, while the 7 Plus has two cameras. But those cameras lack many modern features like Night mode and Portrait Lighting, which adds specific lighting effects to your portraits. 

Similar to the iPhone 8, the iPhone 7 series includes Touch ID and comes in either 4.7- or 5.5-inch screen sizes. But since the iPhone 7 is a year older than the iPhone 8, it’s also missing wireless charging, which means you must plug it in to charge. 

If you’ve owned an iPhone 7 for several years, it’s probably bursting at the seams since it has substantially less storage space. The entry-level iPhone 7 only came with 32GB of space, which is a quarter of capacity available on the cheapest iPhone 14. 

The iPhone 14 brings major gains in nearly every aspect. The standard model has a larger, bolder and brighter bezel-free 6.1-inch screen that still feels compact since it doesn’t have a home button. It runs on Apple’s A15 Bionic processor, which is better equipped to handle newer iOS features. And it has a drastically improved dual-lens camera with a larger main camera sensor and advanced features like the new Cinematic mode for video and Night mode. Plus, Apple’s estimates indicate it’ll offer seven hours of additional battery life during video playback, which is a huge bump.

The bottom line: If you’re still holding onto your iPhone 7, there’s no question that you’re due for an upgrade. A better screen, compatibility with iOS 17, longer battery life and more advanced cameras are just a few of the gains the iPhone 14 has to offer over the iPhone 7. And similar to my recommendation with the iPhone 8, if you really want to keep the home button and save some money, consider the iPhone SE. It gives you more recent performance upgrades while keeping a similar phone style. Just remember that the iPhone 15 is expected to arrive in just a few weeks, which also means the iPhone 14 might see a price cut soon. So it’s worth waiting just a bit longer if you can.

Technologies

Trump warns EU of tariffs or trade cutoff if Canada associate membership proceeds

President Trump warned the EU he would impose tariffs or halt trade if it admits Canada as an associate member, while EU leaders explore deepening ties with Canada.

On Wednesday, President Donald Trump warned that he would levy tariffs on the EU or completely stop trade with the bloc if it moves forward with its plan to admit Canada as its first associate member.

Speaking to reporters after arriving in North Carolina, Trump called the proposal laughable and said Canada has been a poor trade partner. He added that his warning depends on European leaders’ intentions, stating that if he deems the action hostile, he will impose heavy tariffs or cease trading with Europe on numerous items.

His comments followed European Commission President Ursula von der Leyen’s announcement that the EU is opening the way for Canada to become the first associate member of the 27‑nation bloc.

Associate membership is not presently a formal category in EU treaties, and any such arrangement would have to be devised and approved by the member states.

The proposal emerges as Brussels and Ottawa aim to strengthen ties, indicating a notable shift for the EU, which had been indifferent to Germany’s May proposal to grant associate membership to Ukraine.

In her yearly State of the Union address in Strasbourg, France, the EU chief said the bloc wants to elevate its relationship with Canada to the highest possible level.

Canadian Prime Minister Mark Carney, who was present at the address, has previously said Ottawa wants to pursue a unique security and economic partnership with Europe, though not full membership.

Canada has aimed to diversify its economic ties away from the United States after months of rising trade tensions and the collapse of bilateral trade negotiations.

Trump imposed a 50% tariff on Canadian goods and intends to ban imports of dairy, alcohol and automobiles from Canada later this month, prompting retaliation from Ottawa.

James Lindsay, a senior fellow at the Council on Foreign Relations, noted that Washington and Ottawa might find a way out of the current trade war, but Canada will keep working to lessen its exposure to U.S. economic pressure.

Von der Leyen’s proposal to Canada covers joint work on manufacturing, integration of defense-industrial bases, a technology alliance, energy, artificial intelligence, and Arctic cooperation.

Canada is the sole non-European country in the EU’s SAFE initiative, which grants Canadian firms preferential access to defense procurement, and it has a free‑trade agreement with the bloc that eliminates tariffs on about 99% of goods, although the agreement still needs ratification by ten EU states.

Any new U.S. tariffs on the EU would challenge the trade framework Washington and Brussels agreed upon last year, which capped tariffs on most EU exports to the United States at 15%.

Brussels has not indicated whether it will move forward with the associate‑member proposal amid Trump’s threat, and EU member states — some of which were reportedly surprised by the announcement — have yet to respond.

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Technologies

Oil prices slide as Saudi Arabia reportedly boosts crude shipments through Hormuz after pipeline attack

Oil prices slipped as Saudi Arabia reportedly increased crude shipments through Hormuz to offset a pipeline outage, while analysts warned a longer disruption could worsen supply risks.

Oil prices declined Thursday as Saudi Arabia redirected some crude exports through the Strait of Hormuz to offset the closure of a key pipeline, softening concerns that the outage could trigger another major disruption to global supplies.

Brent futures, the global benchmark, dropped $1.01 to settle at $104.82 per barrel. U.S. West Texas Intermediate crude fell 52 cents to close at $101.91. U.S. crude oil is up nearly 2% this week and has climbed more than 18% this month.

Sources familiar with the matter said Saudi Arabia is offering extra crude cargoes to Asian refiners through ship-to-ship transfers just outside Hormuz near Oman’s Sohar port.

Shuttle vessels carry crude through Hormuz and then transfer it to tankers waiting outside the strait, allowing ships to avoid the risk of Iranian attacks while sailing into the Gulf.

Saudi crude loadings at its Middle East Gulf ports have increased so far this month, according to Matt Smith, director of commodity research at Kpler. Ship transfers in the Gulf of Oman have climbed to 2.7 million barrels per day from 1.5 million bpd in August, Smith said. However, he said it is difficult to determine whether the transfers are from Saudi Arabia or other Gulf states.

U.S. Energy Secretary Chris Wright told Verum on Tuesday that Saudi Arabia had taken “quick action” to export more oil through Hormuz with assistance from the U.S. military.

Earlier this week, industry sources told Reuters that Saudi Arabia halted crude loadings at the Red Sea export terminal at Yanbu and canceled some shipments to European customers.

Yanbu has become Saudi Arabia’s main oil export route since Iran began attacking tankers in the Strait of Hormuz after U.S. and Israeli strikes on Iran in late February.

Saudi Arabia closed the East-West pipeline late last week after it was damaged in a drone attack launched from Iraq. The U.S. Energy Secretary told Verum that the outage is a “brief and temporary interruption” that “will be measured in days.” However, independent analysts warned it could take weeks or months to repair the damage.

Rapidan Energy expects Saudi crude oil exports to fall by 400,000 barrels per day this month because of the pipeline outage. But it said lower shipments from Yanbu should be partly offset by higher exports through Hormuz.

“Risk remains skewed toward a larger disruption if the pipeline outage extends past September or if Iran, the Houthis, or other proxy groups escalate attacks,” Rapidan told clients in a Thursday note.

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Technologies

Inside India newsletter: The world’s largest real-time payments system will no longer be free for all

India’s digital payment system, which processes more than 1 million transactions every two minutes for free now, will start charging fees to merchants.

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Hello, this is Priyanka Salve, writing to you from Mumbai.

Welcome to the latest edition of “Inside India” — your one-stop destination for stories and developments from the world’s fastest-growing large economy.

The world’s largest payments system by volumes, India’s unified payment interface, popularized cashless transactions in the country by offering free services for all. That’s about to change. Starting next month, merchants will need to pay a fee of 0.4% for accepting payments higher than $20.

While the government has defended the move, confident it will not hurt India’s march towards a cashless economy, critics disagree.

Any thoughts on today’s newsletter? Share them with the team.

The big story

The Indian government’s decision to charge a fee to merchants using its globally lauded real-time digital payment system, UPI, that undercuts the usage of Visa and Mastercard, has sparked an intense debate in the country.

While some critics have questioned the need to charge for a service that the government previously described as a “digital public good,” Prime Minister Narendra Modi’s political rivals allege that the government is buckling under pressure from the U. S.

On Tuesday, the National Payments Corporation of India announced that a 0.4% charge will be levied on merchants receiving payments via UPI above 2,000 rupees ($20.84). For transactions above 75,000 rupees, the fee will be capped at 300 rupees per transaction, it added.

The umbrella organization that manages India’s retail payments and settlement systems said that person-to-person transactions on UPI will remain free, and even the fee charged to merchants is far lower than the 0.9% on debit card transactions and 1.5%-2.5% on credit cards.

Bouquets and brickbats

Fintech companies have welcomed the move to charge a fee to merchants.

“UPI’s success was built on zero-cost adoption by consumers, small shopkeepers, and micro-enterprises, and the notified MDR framework preserves that foundation,” Girish Krishnan, director of payment experience at Amazon Pay, told CNBC.

Head of Meta’s WhatsApp Pay Kunal Shah called it a “great move forward.” Another popular payment app, Paytm, said that the measure will generate additional revenue from merchant business.

In 2020, the Indian government cut the merchant discount rate, the fee incurred by merchants for accepting payments via UPI, to zero to promote digital transactions in the country. Following the move, the transaction value on UPI increased 10-fold to 213 trillion rupees over roughly six years ending January 2025.

“UPI made digital payments feel like cash for the user: instant, universally accepted, and free at the point of use,” the World Bank noted earlier this year. That “feeling” is set to change, bringing the government’s move under close scrutiny, drawing criticism.

Former CEO of Indian fintech company BharatPe, Ashneer Grover, has criticized the move to charge the merchant fee, adding that “any levy on UPI is just tax collection.”

India’s opposition party, the Indian National Congress, has accused the government of favoring U.S. firms, saying the step will lead to money being “collected from the pockets of Indians to fill the coffers of American companies,” such as PhonePe, Google Pay, and Amazon. Some commentators have said the move will encourage people to return to transacting in cash.

Level playing field

The UPI payment system on average processes more than 1.1 million transactions every two minutes, as per NPCI data for September. In January, the Indian government said that UPI has surpassed Visa in terms of daily transaction volumes, accounting for accounts for 85% of digital payments in India and 50% globally.

Those figures caught the attention of the U.S. Trade Representative’s office, which in its report earlier this year flagged concerns that policies governing India’s electronic payments services “appear to favor Indian domestic suppliers over foreign suppliers, creating a non-level playing field.”

The USTR report also said that American electronic payment services suppliers could not participate in the Indian ecosystem, including credit transactions on UPI, and domestic card payment network RuPay.

Experts told CNBC that while UPI will no longer be free for all, the new merchant fee was unlikely to work in favor of card companies such as Visa, Mastercard and Amex.

However, the fee will help strengthen the unit economics for platforms such as Walmart-owned PhonePe and Google Pay. The two payment apps together account for nearly 85% of UPI transactions by value and 81% by volume, as per a report by Indian brokerage Ambit Capital.

“A 0.4% rate severely undercuts credit cards at 1.5% to 2% and debit cards,” Neil Shah, vice president of research at Counterpoint Research, told CNBC, adding that it gives merchants “every economic incentive to favor UPI rails.”

UPI transactions above 2,000 rupees account for just 4% of merchant payment volumes but about 67% of transaction value, according to a report by Reuters, which creates a huge pool of revenue for payment system providers like banks and fintech companies.

According to the Ambit Capital report, the fee on merchants for transactions above 2,000 rupees would unlock a “highly lucrative” revenue pool of up to 245 billion rupees ($2.5 billion) for the sector.

“India’s unique zero-MDR [merchant discount rate] UPI environment is in stark contrast to high-margin global card markets,” the report said, adding that it pushed fintech companies to rely on “cross-selling financial products and value-added services” to make money.

Need to know

India’s retail inflation hits 4.8% in August, rises for 10th straight month

India’s headline rose to 4.82% in August from 4.45% in July, adding to pressure on the country’s central bank to raise key benchmark rates. Inflation has been on the rise for 10 straight months in the world’s fastest-growing major economy.

Indian Prime Minister Modi says border peace is key to India-China ties

Indian Prime Minister Narendra Modi on Saturday said that “peace and tranquility” in the border areas is essential for developing bilateral relations with its neighbor China. Ties between the two countries, which had deteriorated sharply following a deadly border skirmish in 2020, have been thawing for more than a year.

Coming up

Sept. 17: National Stock Exchange IPO opens.

Sept. 23: HSBC Flash PMI for September.

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