The National Payment Corporation of India (NPCI) has issued a statement via its official Twitter handle to clarify that there are no charges for normal UPI payments. The statement also highlights that the interchange charges only apply to transactions made via Prepaid Payment Instruments (PPIs) such as wallets and credit cards.
Interchange Fee for PPI-based UPI Transactions
According to NPCI, PPI-based UPI transactions will attract an interchange fee of 1.1%. This fee is applicable as per the rules set by the organization. Therefore, customers who use PPIs to make UPI transactions will have to bear this additional charge.
Choice for Customers
NPCI’s Twitter post further clarifies that customers will now have the option to use any bank account, Rupay Credit card, or prepaid wallet on UPI-enabled apps. This addition will provide more flexibility and convenience to users of the platform.
UPI – Free, Fast, Secure, and Seamless
NPCI has emphasized that UPI is a free, fast, secure, and seamless platform for making transactions. Every month, over 8 billion transactions are processed without any charges for customers and merchants using bank accounts. This feature has made UPI one of the most popular payment platforms in India.
Why is the NPCI proposing this fee?
Currently, most transactions are for smaller amounts. The NPCI believes that by incentivizing PPI providers to promote UPI transactions for higher amounts, the average transaction value of transactions can be increased, and the overall cost of payment systems in India can be reduced.
Is the proposed fee in line with international standards?
According to the NPCI, the proposed interchange fee is in line with the recommendations of the Committee on Payments and Market Infrastructures and the World Bank, which suggest an interchange fee of up to 1.15 per cent for UPI transactions.
Will this fee be implemented immediately?
However, the decision has not been made yet, it will be taken by the Reserve Bank of India (RBI), which regulates payment systems in India. The NPCI has submitted its proposal to the RBI, and it remains to be seen whether the RBI will approve the recommendation. If the recommendation is approved, it could have a significant impact on PPI providers and merchants. PPI providers may need to adjust their fee structures to account for the interchange fee, and merchants may face higher costs for accepting payments. However, the NPCI believes that the long-term benefits of promoting higher-value UPI transactions will outweigh the short-term costs.