If UPI can track the worker, why can't it protect them?

India’s digital economy has made informal work easier to pay, record and monitor. It has not necessarily made the worker more secure. The latest dispute over UPI charges brings that contradiction into sharp focus.

From October 15, a 0.4% Merchant Discount Rate (MDR) will apply to specified person-to-merchant UPI transactions above Rs.2,000, with the charge capped at Rs.300 for transactions of Rs.75,000 and above. The government has clarified that the MDR will not apply to person-to-person payments and that around 96% of P2M transactions will remain unaffected.

But for gig and platform workers, the question is not simply whether UPI itself remains free. It is who ultimately absorbs the cost when money moves through the platform economy.

For instance, in Hyderabad gig workers have asked the Centre, RBI, NPCI and payment platforms to ensure that the new payment-processing cost does not find its way into their earnings. Their concern includes reduced trip or delivery payouts, deductions from incentives, settlement charges, additional platform fees or other commissions. They are demanding transparency from aggregators and intermediaries over how worker settlements will be protected.

That itself is the larger fault line.

UPI has brought informal workers into a remarkably visible financial ecosystem. Their transactions can be recorded, traced and potentially used to understand income flows. Yet digital visibility does not automatically translate into a written contract, predictable earnings, social security or collective bargaining power. That is the central contradiction identified in recent analysis of India’s informal workforce: the payment has become formalised faster than the labour relationship itself.

India’s gig workforce was estimated at 7.7 million in 2020–21 and is projected to reach 23.5 million by 2029–30. These workers occupy an unusual position in the labour market — essential to the functioning of platforms, but often operating without the institutional protections traditionally associated with employment. Their work is increasingly governed by ratings, incentives, digital settlements and algorithmic systems.

The result is a new form of workplace without a workplace.

A delivery rider does not need a factory gate to be controlled. A driver does not need a supervisor standing behind him. The app can allocate work, calculate incentives, record performance and determine visibility to customers. The same digital architecture that makes the worker legible to the platform can leave the worker with little equivalent power over the rules governing that work.

This is also where the old language of trade unionism begins to change.

The industrial worker had a factory, a recognised employer and a physical workplace around which collective bargaining could be organised. The gig worker has a smartphone, an algorithm and a dispersed workforce. Recent discussions around the future of unions points to a different weapon: not the factory gate being locked, but thousands of workers logging out simultaneously.

That could be a possibility because the platform economy has created an unusual labour paradox. It has fragmented workers physically while connecting them digitally.

The UPI dispute is therefore bigger than a 0.4% charge. It raises a more fundamental question about India’s digital transition: if technology can make every transaction visible, can the same system make the person behind that transaction secure?

India has digitised the flow of informal labour. The unfinished question is whether it will formalise the protection of the people who keep that flow moving.