Attention: UPI merchant transactions over INR 2,000 to carry charge of 1.1% from April
Attention: UPI merchant transactions over INR 2,000 to carry charge of 1.1% from April

Attention: UPI merchant transactions over INR 2,000 to carry charge of 1.1% from April

Attention: UPI merchant transactions over INR 2,000 to carry charge of 1.1% from April

Written by?Sanjay Kumar

The National Payments Corporation of India (NPCI) has issued a circular in which it suggested “Prepaid Payment Instruments (PPI)” fees on merchant transactions on Unified Payments Interface (UPI).

The regulatory body of the UPI payment system has stated that the PPI fees will be charged on transactions over INR 2,000 on UPI and will result in an interchange of 1.1% of the transaction value.

Unified Payments Interface

  • Product type – Instant real-time?inter-bank payment system
  • Owner – National Payments Corporation of India
  • Produced by – National Payments Corporation of India
  • Country – India
  • Introduced – 11 April 2016; 6 years ago
  • Markets – India, Bhutan, Nepal, Qatar, Saudi Arabia, Malaysia, Singapore, Mauritius, Bahrain, Maldives, United Arab Emirates, France, Oman, United Kingdom, European Union, Russia (International by cross border payment agreements)ban

Interchange fees are imposed to cover the expenses of accepting, processing, and authorizing transactions. This is expected to increase the cost of transactions. The new rule will come into effect from 1 April.

According to the circular, the issuer of prepaid instruments will also be required to pay 15 basis points of the fee to the remitter bank for loading a transaction value above INR 2,000.

It is important to note that the fee will not be applicable to person-to-person transactions or person-to-merchant transactions between a bank and the prepaid wallet.

NPCI will conduct a review of the proposed pricing on or before 30 September.

What will be the impact on you?

Now it is essential for you to raise a question in your mind as to whether this fee will have to be paid by the general user, and the answer is?NO. This does not apply to peer-to-peer (P2P) and peer-to-merchant (P2M) transactions between bank accounts and PPI wallets. This means that if you make a payment to someone, a shopkeeper, etc., then you will not have to pay any fees.

It is reported that 1.1 percent is the highest fee. There are many merchants who will have to pay lesser interchange fees than this. For example, if UPI payment is made using petrol pump prepaid instrument, then the interchange fee will be 0.5 percent. Similarly, if someone makes mutual funds, insurance, utility, education payments, etc., different interchange fees will be charged.

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