UPI merchant transactions over Rs 2,000 to be charged at 1.1 per cent from April 1
By Team Newsable | First Published Mar 29, 2023, 11:35 AM ISTThe National Payments Corporation of India (NPCI) has advised Prepaid Payment Instruments (PPI) fees be applied to merchant transactions on Unified Payments Interface (UPI) beginning on April 1 in a recent circular. The UPI's regulating authority, NCPI, stated in the circular that using PPIs on UPI will result in interchange at 1.1% of the transaction value for sums over Rs 2,000.
The National Payments Corporation of India (NPCI) has recommended an interchange fee on Unified Payments Interface (UPI) transactions of over Rs 2,000 made through Prepaid Payment Instruments (PPIs). In order to increase income for banks and payment service providers, who have been battling with the high cost of UPI transactions, the NPCI has suggested an interchange charge of up to 1.1%. By September 30, 2023, the interchange rate will be revised.
In India, UPI is presently the most popular and widely used payment method for users to immediately move money between bank accounts via their smartphones. In contrast, PPIs are online purses that let users keep money and send payments. In India, PPIs like Paytm, PhonePe, and Google Pay are available.
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An exchange fee is a cost incurred by one bank when completing a transaction with another bank. The bank of the vendor (the individual or company getting the money) pays the bank of the recipient the interchange charge in the case of UPI transfers. (the person making the payment).
The new fee on UPI transactions will only be applicable to merchants who accept payments over Rs 2,000 using prepaid payment instruments (PPIs) such as mobile wallets. There are no extra costs for individual consumers using UPI for personal transfers.
The majority of UPI transfers currently only involve lesser sums. The NPCI contends that by rewarding PPI companies for promoting UPI transactions for larger sums, the average transaction value of UPI transactions can rise and the total cost of India's payment systems can be brought down.
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However, the decision has not been made yet, it will be taken by the Reserve Bank of India (RBI), which regulates payment systems in India. The NPCI has submitted its proposal to the RBI, and it remains to be seen whether the RBI will approve the recommendation.
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