Prepaid Payment Instrument Fees For Merchant Transactions Via UPI: NPCI

National Payments Corporation of India (NPCI) has suggested charging interchange fees on merchant transactions made through Unified Payments Interface (UPI) in a recent circular, first reported by Moneycontrol. According to the NPCI circular, there will be Prepaid Payment Instruments (PPI) fees on merchant transactions on Unified Payments Interface (UPI).

NCPI notified that using PPIs will attract an interchange at 1.1 percent of the transaction value for transactions worth over Rs 2,000 through UPI. The interchange fee is levied to cover the costs of accepting, processing, and authorising transactions.

The new rule will come into effect from April 1, 2023 and later NCPI will further review the given price on or before September 30, 2023.

Post the additional charges come into effect, the PPI issuer will be paying around 15 basis points as a wallet-loading service charge to the remitter bank. Notably there will be no interchange fee for peer-to-peer (P2P) or peer-to-peer-merchant (P2PM) transactions between the bank account and the PPI wallet.

NPCI further updated in a new circular that, the interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers. Additionally it clarified that there are no charges for bank account to bank account based UPI payments.

Now, with new additions to UPI, the customers will have the choice to use any bank account, Rupay Credit card and prepaid wallets on UPI enable apps.