The National Payments Corporation of India (NPCI) recently issued a circular recommending an interchange fee of 1.1% for certain merchant UPI transactions over Rs 2,000, made using prepaid payment instruments (PPI) such as online wallets. According to the circular published on March 24, the changes will take effect from April 1, 2023, and the above prices will be adjusted no later than September 30, 2023. But the question is who pays this fee? Read More Business News on our website.
UPI Transactions Fee and Charges Details
This news created havoc on social media. People are confused about the NPCI’s recommendation, worried whether they will be burdened with exchange fees. But according to the NPCI circular, the 1.1% exchange fee will not affect the end customer and UPI transactions will remain free for him.
Essentially, these fees will only apply to digital wallet transactions made through a merchant’s QR code, potentially being paid by the seller to the wallet issuer. Therefore, neither the seller nor the customer is directly affected by the exchange fees. Paytm Payments Bank has also issued a circular clarifying.
While exchange fees are paid by the buyer/seller to the wallet or card issuer, they can ultimately affect the merchant if passed on to them. However, merchants and small merchants are unlikely to be affected as it only applies to payments over Rs 2,000.
The fees will not affect customers who use PPI as a wallet for UPI transactions at this time, but they may be affected later if the merchant decides to shift the burden.
NPCI Official Statement over UPI Transactions Fee & Charges News
NPCI also states that PPI issuer will pay 15 basis points as a wallet loading service fee to the issuing bank (account holder’s bank) to load transaction value above Rs 2,000. This means that when a customer deposits a digital wallet for UPI transactions, the PPI issuer will have to pay a fee to the issuing bank. It may affect customers if the wallet issuer decides to pass these additional fees on to the customer.
In a new press release released today, NPCI has provided more clarity on exchange fees. As a result, NPCI has now enabled PPI wallets to be part of the interoperable UPI ecosystem,” said NPCI. He added: “The introduced interchange fees apply only to PPI merchant transactions and do not charge customers, further clarifying that there are no settlement fees for bank account-based UPIs. (i.e. regular UPI payments). Read more latest business news on Industrial Front.
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