NB Explains | UPI users to be charged at 1.1 per cent starting April 1 for over Rs 2,000 transactions? No..

The National Payments Corporation of India (NPCI) has recently set the interchange fee at 1.1% for merchant transactions initiated using a Prepaid Payment Instrument (PPI) such as mobile wallets on the Unified Payments Interface (UPI) network. The changes take effect from April 1, according to the NPCI circular.

 

 

However, this unleashed chaos as people are confused whether it is applicable for all the UPI users or not

 

 

With so much confusion being created due to media reports and fake news, NPCI released a statement on what does it mean in details.

 

In its statement, NPCI stated that "UPI remains free". The regulatory body in its circular said that these interchanges shall not be applicable to P2P (peer to peer) and P2M (peer to merchant) transactions between “bank account and the PPI wallet."

 

"Traditionally, the most preferred method of UPI transactions is linking the Bank account in any UPI enabled app for making payments which contributes over 99.9% of total UPI transactions. These Bank account-to-account transactions continue to remain free for customers and merchants," it said.

 

What the 1.1% interchange fee means and who is it for?

 

The issuer of a PPI should pay 15 bps (basis points) as wallet loading service charge to the remitter bank (account holder’s bank) for loading transaction value greater than Rs 2,000. This is if users make use of UPI to load their wallets through their bank accounts.

 

 

It also said, "Recent regulatory guidelines, the Prepaid Payment Instruments (PPI Wallets) have been permitted to be part of the interoperable UPI ecosystem. In view of this NPCI has now permitted the PPI wallets to be part of the interoperable UPI ecosystem. 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 here are no charges for the bank account to bank account based UPI payments (i.e UPI payments)