From April 1, payments made using digital wallets through the Unified Payments Interface (UPI), such as Paytm, Gpay, and PhonePay, will be subject to a 1.1% fee if the transaction is for Rs 2000 or more.
Prepaid Payment Instrument (PPI) costs should be charged to merchant transactions on UPI beginning the following month, according to a notification from the National Payments Corporation of India (NPCI), the organisation responsible for overseeing UPI.
According to NPCI, the interchange fee is charged to defray the costs associated with authorising, processing, and accepting transactions. This will increase transaction costs.
“NPCI now permits PPI wallets to function as a component of the interoperable UPI ecosystem.
Customers are not charged, and it has also been made clear that there are no fees for bank account to bank account based UPI payments, according to the circular. The interchange costs established are solely relevant for PPI merchant transactions.
According to NPCI, prices will be reviewed on or before September 30, 2023.
How do I know?
On UPI transactions of Rs 2,000 or more done through PPIs, such as online wallets like Paytm wallet, a 1.1% fee would be applied. Every wallet transaction under 2,000 rupees will not be charged
Regular UPI transactions done straight from bank account to bank account will not be subject to a fee.
The fee will be assessed on the side of the merchant, who may or may not decide to pass the additional cost along to customers. PPIs are UPI-compatible digital wallets that let users store money and send payments.
Interchange fee: what is it?
The fee a bank charges another bank to conduct a transaction is known as an interchange fee. The bank of the merchant (the person or business receiving the payment) pays the bank of the payer the interchange fee in the event of UPI transactions (person making the payment).
Customers will they be charged for UPI payments?
The cost won’t be assessed to customers. Only PPI merchant transactions are subject to the newly announced interchange fees. Also, there won’t be any fees associated with UPI payments that are based on bank accounts.
The Council on Payments and Market Infrastructures and the World Bank both recommended an interchange cost of up to 1.15 percent for UPI transactions, and NPCI said the suggested interchange fee is in accordance with their recommendations.
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