Users making UPI merchant transactions to pay 1.1% charge on payments above Rs.2,000 while using PPI from April 1st in India
Making transactions via UPI has been the most common and easiest way for the past few years. Since the concept of digital money has been promoted frequently in India, many users now prefer to pay through the UPI system only as just a tap and you can easily transfer the amount to another person’s bank account. We all are aware of PPIs (Prepaid Payment Instruments) that allow users to store money and make payments. PPIs in India include Paytm, PhonePe, and Google Pay.
If you make UPI merchant transactions using PPI then this news might affect you as NPCI (National Payments Corporation of India) has suggested PPI fees of up to 1.1% be applied to all merchant transactions of over Rs.2,000 made via UPI beginning on April 1st.
NCPI, UPI’s governing body, said in a recent circular, “ Interchange at the rate of 1.1% of the transaction value/amount (using prepaid payment instruments or PPI) shall apply to payments made to all online merchants, large merchants and small offline merchants having transaction value/amount greater than Rs. 2,000.”
NCPI will be reviewing charges on or before September 30th, 2023, till then, this newly introduced structure will be the norm for UPI transactions made in India. Though the charge won’t be applicable in terms of P2P (peer-to-peer) and P2M (peer-to-merchant) transactions between a bank account and a PPI wallet. The PPI issuer will pay 15bps as an advanced wallet loading service charge to the remitter bank for loading transaction values over Rs. 2000.
Even though the upper limit for UPI merchant transaction charges has been set to 1.1%, not every transaction above Rs.2,000 will be charged the same PPI fee.
UPI Merchant charges on transactions above Rs.2,000 :
- Telecom- 0.7%
- Mutual fund- 1%
- Utilities/Post office- 0.7%
- Education-0.7%
- Government-1%
- Supermarket-0.9%
- Fuel-0.5%
- Insurance- 1%
- Railways-1%
- Agriculture-0.7%
Apart from this, the merchants were already paying MDR (merchant discount rate) charges of up to 0.9% on Debit & Credit cards transactions
The charges mentioned above are for the merchants only and the customers won’t have to pay any charges but since the merchants with items above Rs.2000 need to pay these charges it could be said that these charges will be passed to the end customer.
