From April 1 2023, UPI transactions made using PPI will incur an interchange charge of up to 1.1%, according to the National Payments Corporation of India (NPCI).
Users are uncertain as to who will be charged for these transactions and which payment methods will be costly, even if the charge will be applied to payments of above 2,000.
"The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers. The National Payments Corporation of India (NPCI) stated in a statement on Wednesday. It is further clarified that there are no charges for the bank account to bank account based UPI payments (i.e. normal UPI payments).”
What does NPCI say?
The NPCI circular states that UPI transactions made using PPI would henceforth be subject to an interchange charge of up to 1.1%. This charge will be applied to transactions costing more than Rs. 2,000. This will also apply to using UPI to load money into wallets.
This interchange charge will not apply to payments made via UPI to friends, family or anybody else, or a merchant's bank account. Peer-to-peer and peer-to-peer-merchant transactions are mostly unaffected. Using UPI, you will be able to transmit money free of charge from your bank account to the bank account of a recipient or a merchant.
What exactly is a prepaid payment method?
Wallets and preloaded gift cards are examples of prepaid payment methods (PPI).
Paytm Wallet, PhonePe Wallet, Amazon Pay, Freecharge Wallet, and others are a few instances of wallets.
What is a UPI PPI payment?
A PPI payment made through UPI entails a transaction carried out through a wallet, such as Paytm Wallet, using a UPI QR code.
For instance, if you have money in your Paytm Wallet and want to use a merchant's UPI QR code to make a payment, an interchange fee of up to 1.1% would be charged for transactions above 2,000.
What does interchange fee mean?
The recipient bank or payment service provider will charge the merchant an interchange fee.