UPI interchange fee: your UPI payments app becoming more handy than cash? Are you feeling cosy while paying online? If yes, then you must be worried about the news of interchange fees floating around. Do not worry; today I will decipher all the information and misinformation for you in a simple way.
UPI interchange fee: NPCI circular
On March 24, 2023, the National Payments Corporation of India (NPCI) released a circular that proposes a change in the UPI interchange fee for specific merchant transactions using prepaid payment instruments (PPI) like online wallets. The proposed UPI interchange fee structure recommends a 1.1 percent charge for UPI transactions exceeding Rs 2,000.
This proposed change will come into effect on April 1, 2023, and will be applicable only for certain merchant transactions using PPIs. The NPCI has also clarified that this fee structure will be reviewed on or before September 30th, 2023.
As soon as this circular came into the light, murmuring started in the masses. The fake news took over social media, and the criticism of the government started. And why should it not? Why pay an extra charge on the maximum retail price? But fortunately, the reality is far from this. And no customer will be required to pay the extra charge.
Also read: Number one remittance receiving country gets a UPI boost
Who will pay the increased charge?
The National Payments Corporation of India (NPCI) has clarified that the newly proposed interchange fee of 1.1 percent will have no direct impact on the end-customer, and UPI transactions will remain free for them. As per the NPCI’s circular, the UPI interchange fee will only be applicable to certain merchant transactions made using prepaid payment instruments (PPIs), like digital wallets.
The proposed UPI interchange fee will not apply to peer-to-peer (P2P) and peer-to-merchant (P2PM) transactions made between a bank account and a PPI. This means that customers can still make P2P transactions using digital wallets without any additional charges.
The interchange fee of 1.1 percent will only apply to digital wallet transactions made via merchant QR codes, where the merchant acquirer is likely to pay the wallet issuer. In this case, neither the merchant nor the customer will be directly impacted by the interchange fee.
It is important to note that the NPCI’s proposal aims to standardize the fees charged for specific types of transactions and ensure a level playing field for all payment modes. By introducing a standard fee structure, the NPCI seeks to promote fair competition and encourage the adoption of digital payments in India.
Although interchange fees are typically paid by merchant acquirers to wallets or card issuers, they could indirectly impact merchants if they choose to pass on the fee to customers. However, the impact on smaller merchants and shopkeepers is expected to be minimal, as the fee will only be applicable on payments exceeding Rs 2,000.
Also read: Modi government puts its weight behind RuPay and UPI to bid farewell to Mastercard and Visa
There are lots of clarifications
Stop spreading #FakeNews @ndtv @NDTVProfit
This is not true and you have seen the NPCI statement.
Yet you persist with malicious disinformation.
Who’s in charge? Anybody? pic.twitter.com/pxCBkEko5v— Kanchan Gupta 🇮🇳 (@KanchanGupta) March 29, 2023
The fake news on UPI transactions being charged is spreading, but there are some people who are quoting the NPCI statement and clarifying the confusion.
You are right Akhilesh.
But why is @ndtv spreading #FakeNews when the channel very well knows what it is Broadcasting is malicious disinformation? https://t.co/nQBQBN4BwF— Kanchan Gupta 🇮🇳 (@KanchanGupta) March 29, 2023
PayTM payments bank has also clarified that no customer would be required to pay the amount. On Twitter, it said, Regarding the NPCI circular on interchange fees and wallet interoperability, no customer will pay any charges on making payments from #UPI either from a bank account or PPI/Paytm Wallet.”
Also read: How to make payment with UPI in these 5 countries
NPCI clarification on the extra charge
Seeing the confusion and fake news floating, the NPCI issued another circular to clarify even more to the people. The circular read, “Recent regulatory guidelines have permitted pre-paid payment instruments (PPI Wallets) 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.”
It further read, The interchange charges introduced are only applicable for PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for bank account to bank account based UPI payments (i.e., normal UPI payments).”
NPCI also said that with this addition to UPI, customers will have the choice of using any bank account, a RuPay credit card, or a prepaid wallet on UPI-enabled apps. So the news regarding the UPI interchange fee to be paid by the customer is fake news and should not be taken seriously.
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