- Starting April 1st, you will have to pay a 1.1 percent charge on your UPI merchant payments above Rs 2,000 made using Prepaid Payment Instruments.
- Not every transaction above Rs 2,000 will be charged with the same percentage.
- The stated pricing will be reviewed by the authority on or before September 30th, 2023.
Starting April 1st, those making UPI payments in India will have to pay a 1.1% charge on the payments above Rs 2,000, while using PPI (Prepaid Payment Instruments). The National Payments Corporation of India has advised Prepaid Payment Instruments (PPI) fees to be applied to all merchant transactions made via UPI (Unified Payment Interface) beginning on April 1st. The recommendation has already been made public via a recent circular, as per reports, and NPCI will review the charges on or before September 30th, 2023.
Prepaid Payment Instruments include online wallets like Amazon Pay, pre-paid gift cards, etc.
UPI payments will soon cease to remain free, here’s the breakdown
While the upper limit of the transaction charges has been set to 1.1 percent, not every transaction above Rs 2,000 will be charged with the same percentage. The introduction of interchange is in the range of 0.5 percentage to 1.1 percent. For instance, users will be charged 0.5 percent for UPI transactions made for fuel purchase, 0.7 percent for telecom, utilities/post office, education, and agriculture, 0.9 percent for supermarket, and 1 percent for mutual funds, government, insurance, and railways.
The PPI issuer will have to pay 15 bps as an advanced wallet loading service charge to the remitter bank for loading transaction values that are greater than the said amount (Rs 2,000). However, the charge won’t be applicable in terms of peer-to-peer (P2P) and peer-to-merchant (P2M) transactions between a bank account and a PPI wallet.
According to an industry expert, who prefers to stay anonymous, these charges had been much awaited by payment providers, because there were costs involved in providing the services, which were free of cost up until now. UPI itself does not charge merchant discount rate (MDR), but it is charged for processing payments on debit and credit card transactions. For instance, UPI incurs a cost of Rs 2 for every transaction of Rs 800. The merchants with ticket items above Rs 2,000, on the other hand, will not be happy, and in one way or the other, these charges will be passed to the end customer.
As mentioned earlier, the new structure will be reviewed by the NPCI on or before September 30th this year, but till then, the newly introduced structure will be the norm for UPI transactions made in India.
