If you use UPI for your daily transactions, there is some information you should be aware of. The National Payments Corporation of India (NPCI) has devised an interchange fee for UPI transactions that will go into effect on April 1. Here’s what you should know.
Charges on UPI transactions!
The National Payments Corporation of India (NPCI) has issued a not-so-public circular (via the Economic Times) revealing that merchant UPI transactions will be charged when made using a prepaid payment instrument (PPI). PPI includes mobile wallets and options such as Amazon Pay, Bajaj Finserv, and others.
Starting April 1, a 1.1% fee will be charged on transactions exceeding Rs 2,000 (no fee for transactions below that amount), but this will vary depending on the structure. For example, a 0.5% fee will be charged when purchasing fuel, 0.7% for agricultural, education, and telecom needs, and so on.
If you’re wondering who will pay the fee, the NPCI has stated that it will not be the users. Furthermore, it will not apply to P2P (peer-to-peer) and P2M (peer-to-merchant) transactions. So, breathe a sigh of relief! It is also revealed that the PPI issuer will have to include a service charge of 15 bps (basic points) for loading the wallet with Rs 2,000. This will be deposited with the account holder’s bank.
For those who are unaware, there was no merchant discount rate (MDR), and everything in the UPI process was free until now.
This follows NPCI’s recent requirement that merchants improve UPI interoperability by clearly stating that UPI payments can be made via any UPI app or by scanning any UPI QR code. They must comply with this by September 30.
Nothing is set in stone for the time being, and NPCI will assess the impact of this new change on September 30. However, this new change may not please merchants! We will keep you updated as more information becomes available.