The National Payments Corporation of India (NPCI) recently announced that from April 1, an interchange fee of up to 1.1 per cent on merchant Unified Payments Interface (UPI). The payments made using Prepaid Payment Instruments (PPIs) will attract interchange fees.
The platforms offering prepaid instruments like wallets and gift cards will have to pay fees on transactions above Rs 2,000. However, according to reports, the fee is 0.5 per cent for certain merchant categories.
The PPI issuer will have to pay 15 basis points as wallet-loading service charges to the account holder’s bank.
How will payments work?
From April 1, the users will be able to send money from their digital wallets to the merchant’s bank account UPI QR code. Earlier, the transfer was only possible from one wallet of the same service provider to the other.
For payments of or greater than Rs 2,000, the merchants will have to pay 1.1 per cent fees to NPCI.
According to a report by
CNBC TV-18, the interchange fee is 0.7 per cent for telecom, education, and utilities/post office. For supermarkets, the fee is 0.9 per cent. A fee of 1 per cent will be levied for transactions related to insurance, government, mutual funds, and railways. The fees for fuel and agriculture-related transactions are 0.5 per cent and 0.7 per cent, respectively.
Will users be required to fee an additional fee?
On Wednesday, the NPCI issued a statement saying that no customer will have to pay any fees.
“Traditionally, the most preferred method of UPI transactions is linking the Bank account in any UPI-enabled app for making payments which contribute over 99.9 per cent of total UPI transactions. These Bank account-to-account transactions continue to remain free for Customers and Merchants,” the NPCI said in a statement.
“The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account-based UPI payments (i.e. normal UPI payments),” it added.
Following that, Paytm Payments Bank tweeted, “Regarding NPCI circular on interchange fees & wallet interoperability, no customer will pay any charges on making payments from #UPI either from bank account or PPI/Paytm Wallet. Please do not spread misinformation. #Mobile payments will continue to drive our economy forward!”
Earlier this week, Paytm Payments Bank announced that its wallet customers would be able to make payments on every UPI QR code and online merchant where UPI payments are accepted.
