The National Payments Corporation of India cleared the air on Wednesday about the recently introduced interchange charges, saying they are only applicable for the prepaid payment instruments (PPI) transactions and there is no charge to customers
No. NPCI said that PPI fees would be applied to merchant transactions on Unified Payments Interface beginning on April 1
NPCI recently said transactions through UPI will attract an interchange fee of up to 1.1 per cent. The charges will be levied if the transaction is worth more than Rs 2,000
The UPI interchange fee will be used to cover the costs of accepting, processing, and authorising transactions and increasing the revenue for banks and payment service providers
UPI payments for the following payments will have additional tax:
- 0.5% for fuel
- 0.7% for telecom, utilities/post office, education, agriculture
- 0.9% for supermarket
- 1% for mutual fund, government, insurance, railways
The interchange fee would not be applicable on peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between a bank account and a PPI wallet
Even if you are a merchant, payments made via UPI, like Paytm, Phonepe, or Google Pay, to friends, family or any other individual or a merchant’s bank account will not be affected by this interchange fee
The interoperability between UPI and PoS will ease the payment collection system for merchants as it will allow them to accept payments regardless of the wallet being used by the consumer
The Reserve Bank of India is yet to review the newly announced UPI transaction fee recommended by the NPCI