Buzz prevailed over the whole country as reports emerged saying that the NPCI will levy a fee of up to 1.1% on prepaid payment instruments (PPIs) for transactions through UPI. The 1.1 per cent interchange fee of the transaction value will be levied only on merchant payments of above Rs 2,000, according to a circular by NPCI dated March 24, 2023.
NPCI issues clarification
Following rounds of misinformation that UPI will be chargeable now, the NPCI on Wednesday issued a clarification about the interchange charges, saying the charges are not applicable to customers but for the prepaid payment instruments (PPI) transactions.
What are PPIs?
Wallets, smart cards, vouchers, magnetised chips come under prepaid payment instruments. Paytm wallet, PhonePe wallet, Amazon Pay, SODEXO vouchers are some examples of this.
Who will have to pay?
The interchange fee will be levied on specified categories of merchants including online merchants, large merchants, and small merchants for transactions of over Rs 2,000 from April 1.
Who won’t have to pay?
The NPCI also clarified that there will be no charges for the bank account to bank account-based UPI payments — normal UPI payments. “The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account-based UPI payments (i.e. normal UPI payments),” it said.
Free for these people
In recent times, NPCI said, UPI has emerged as the preferred mode of digital payment by offering free, fast, secure and seamless experience. Traditionally, the most preferred method of UPI transactions is linking the bank account in any UPI-enabled app for making payments which contribute over 99.9 per cent of total UPI transactions. These bank account-to-account transactions continue to remain free for customers and merchants.