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UPI Merchants to be Charged 1.1% on Transactions Above Rs 2,000 from April 1
Posted on: 29/Mar/2023 10:14:51 AM
Effective April 1, 2023, the National Payments Corporation of India (NPCI) has announced that Prepaid Payment Instruments (PPI) fees will be applied to merchant transactions on the Unified Payments Interface (UPI). The move is intended to cover the costs of accepting, processing, and authorizing transactions on the UPI platform. For amounts exceeding Rs 2,000, using PPIs on UPI will result in an interchange fee of 1.1% of the transaction value. NPCI, which is UPI`s governing body, has specified that peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between a bank account and a PPI wallet will not require an interchange fee. The PPI issuer will pay the remitter bank about 15 basis points as a wallet-loading service charge.
The introduction of interchange fees on the UPI platform is in the range of 0.5-1.1%, with interchange fees set at 0.5% for fuel, 0.7% for telecom, utilities/post office, education, agriculture, 0.9% for supermarkets and 1% for mutual funds, government, insurance, and railways. The pricing structure will be reviewed by NPCI on or before September 30, 2023.
The NPCI`s announcement has generated mixed reactions from stakeholders. Some experts believe that the introduction of interchange fees will increase the cost of transactions and affect small merchants. Others argue that interchange fees will help the digital payment industry thrive by enabling payment service providers to invest in their infrastructure and provide better services to customers.
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