According to a suggestion by the National Payment Corporation of India, the UPI transactions made by prepaid instruments will have an added interchange fee of 1.1 per cent for a few merchant payments from April 1, 2023.
According to an NPCI circular, which was made public on March 24, certain merchants will have to pay interchangeable fees on merchant payments of Rs.2,000. There will be no such fee levied on the transaction amount up to Rs. 2000.
.@IndiaToday claims that UPI transactions over Rs 2000 will be charged at 1.1%#PIBFactCheck
➡️There is no charge on normal UPI transactions.➡️@NPCI_NPCI circular is about transactions using Prepaid Payment Instruments(PPI) like digital wallets. 99.9% transactions are not PPI pic.twitter.com/QeOgfwWJuj
— PIB Fact Check (@PIBFactCheck) March 29, 2023
.@tv9gujarati claims that #UPI transactions over ₹2000 likely to carry charge of 1.1% from 1st April.#PIBFactCheck
➡️There is no charge on normal UPI transactions.
➡️Read more in @NPCI_NPCI's latest circular https://t.co/sVR9oLB8PG pic.twitter.com/U4DP2pqpt9
— PIB Fact Check (@PIBFactCheck) March 29, 2023
Ever since the circular is out, there has been some confusion around the usage of UPI by the customers, as several media organisations reported it as a fee to be paid by the consumers. However, the NPCI guidelines state that the fee will not apply to peer-to-peer transactions or peer-to-peer merchant transactions. Hence if any individual is sending money to their friends, family, or a small business merchant’s bank account, there will be no such interchange fee applicable to their transactions.
UPI is free.
The interchange charges of 1.1% are only on credit cards linked to UPI which constitute 0.01% of the total UPI transactions. pic.twitter.com/0g2oROVyXy
— Rishi Bagree (@rishibagree) March 29, 2023
According to the circular, only certain merchant transactions which are made by prepaid payment instruments will attract the interchange fee. A few examples of these wallets are Paytm, PhonePay, Amazon Pay, MobiKwik etc.
The interchange fee in this case is similar to the merchant discount rate. The fee is to be paid by the merchant whenever the customer processes a transaction.
