The National Payments Corporation of India (NPCI) announced the Prepaid Payment Instrument (PPI) fees would be applied to all UPI merchant transactions from April 1, 2023.
The NCPI told that the fees for the merchant transaction on UPI above the amount of Rs.2000 will have to pay 1.1 percent of the full transaction amount. This would take policy will start taking place from Apr 1, 2023, and then again will have the amendments on Sep 30, 2023
The interchange fee, is connected with card payments, is charged to cover the expenses of accepting, processing, and authorizing transactions. Interchange fees are intended to increase income for banks and payment service providers.
The interchange charge on various services will be in the range of 0.5-1.1 percent. A 0.5% interchange charge will be levied on gasoline, 0.7% on telecom, utilities/post office, education, and agriculture, 0.9% on supermarkets, and 1% on mutual funds, government, insurance, and railroads.
Transactions like P2P and P2PM between the bank account and the PPI wallet will be excluded from the charges. As a wallet-loading service charge, the PPI issuer will pay the remitter bank roughly 15 basis points. As a result, payments done using UPI, such as Paytm, Phonepe, and Google Pay, to friends, relatives, or any other individual or merchant’s bank account will be unaffected by this interchange charge.
The suggested interchange cost is consistent with the Council on Payments and Market Infrastructures’ and World Bank’s guidelines, which call for an interchange fee of up to 1.15 percent for UPI transactions.
The Reserve Bank of India which is India’s primary regulator for all payment systems makes this decision. The NPCI has submitted its suggestion to the RBI and now has to wait to see if its recommendation is approved.