UPI is currently the most popular and widely utilised payment method for customers to immediately transfer money between bank accounts via their smartphones. PPIs are online wallets that let users save money and send payments. Currentlyin India, there are a several PPIs, including Paytm, PhonePe, and Google Pay.
As of April 1, merchant UPI (Unified Payments Interface) transactions would be subject to an interchange fee of up to 1.1%. According to a notification from the National Payments Corporation of India (NPCI).
Prepaid Payment Instruments (PPIs) will pay an interchange fee when used for transactions through UPI. According to a new circular from the NPCI. If the transaction exceeds Rs. 2,000, a fees will also be assessed.
For various types of merchants, there are different interchange fees. It varies from 0.5% to 1.1%, and in some categories, a cap is also applicable.
The newly implemented fee, according to a statement from NPCI today, solely applies to merchant transactions. Which are further carried out using prepaid payment instruments.
Below is the official circular from NPCI:
The interchange charge is 0.7% for telecom, education, and utilities/post offices. Whereas, it is 0.9% of the transaction value for supermarkets. For insurance, government, mutual funds, and railroads, there will therefore be a 1% charge, a 0.5% charge for fuel, and a 0.7 charge for agriculture.
The fees will start to apply on April 1.
For peer-to-peer and peer-to-peer-merchant (P2PM) transactions, exchange will not be used. For transactions over 2,000, PPP issuers will therefore be forced to pay a wallet-loading fee. The same will be of 15 basis points (bps) to the remitter bank.
On or before September 30, 2023, the NPCI will evaluate the pricing.
The majority of UPI transactions now only involve minor amounts. 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 overall cost of India’s payment systems can be brought down.
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