UPI payments in India are all set to go under a major change from April 1, 2023. The National Payments Corporation of India (NPCI) recently said in a circular that it will levy a 1.1 per cent fee on all UPI transactions above Rs 2,000 from April 1.
“Interchange at the rate of 1.1 per cent of the transaction value/amount (using prepaid payment instruments, or PPIs) will be applicable for all online merchants, large merchants and small offline merchants where the transaction value/amount exceeds Rs 2,000,” As reported, NPCI in a recent circular wrote By The Economic Times.
Who will be accused?
While this is true, at 1.1 all UPI transactions will not be charged. The organization has set certain conditions under which this fee will be levied on UPI transactions. According to the circular, prepaid payment instruments (PPI) charges will be applicable on all merchant transactions done through UPI above Rs 2,000. In other words, merchants who accept payments of Rs 2,000 or more through PPIs or gift cards like mobile wallets like Amazon Pay, Google Pay or Paytm will have to pay the fee.
On the other hand, PPI issuers, companies like Amazon Pay or Paytm will have to pay 15 bps as advanced wallet loading service fee to the sending bank (or the bank linked to the wallet) for loading transaction values. 2,000 exceeds Rs.
However, this fee will not be applicable for peer-to-peer (P2P) transactions. This means that you or your friend won’t have to pay this fee if you decide to split the bill and pay later. Also, Peer-to-Merchant (P2M) transactions between bank accounts and PPI wallets will also not attract charges under the new regime.
1.1 percent fee will not be charged on all UPI transactions
according to a report By 91Mobiles, the 1.1 per cent fee will not be charged on all transactions above Rs 2,000. Instead, it will be used as an upper limit for charging UPI transactions and the total fee will be in the range of 0.5 per cent to 1.1 per cent. The report states that fuel purchases will attract a 0.5 per cent fee, while UPI transactions for insurance and mutual funds will attract a 1 per cent fee. Similarly, UPI transactions for telecom bills, post office purchases and education will be charged 0.7 percent, and purchases made at supermarkets will be charged 0.9 percent.
While these changes will come into effect from next month, NPCI will review the charges on or before September 30, 2023.
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