Starting from April 1st, the National Payments Corporation of India (NPCI) will be implementing Prepaid Payment Instrument (PPI) charges for all UPI (Unified Payments Interface) transactions. As per the NPCI notification, an interchange fee ranging from 0.7% to 1.1% will be applicable on merchant UPI transactions of prepaid payment instruments if the transaction is more than Rs 2,000. It is important to note that these charges will only be applicable for prepaid payment instruments such as wallets and credit cards. Some of the PPIs in India include Paytm, PhonePe, and Google Pay.
The interchange fee is usually associated with card payments and is charged to cover the costs of accepting, processing and authorizing transactions. For different sectors, the interchange fee will differ. While the interchange fee for telecom, education, and utilities is 0.7%, it is 0.9% for supermarkets. The government, insurance, mutual funds, and railways will be charged 1%. However, the interchange fee will not be applied for peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions, meaning normal UPI payments in shops and transfers between two individuals will not attract these new charges.
In conclusion, with the implementation of PPI charges on UPI transactions, customers will have to bear these additional charges when using prepaid payment instruments such as wallets and credit cards. However, with the exclusion of P2P and P2PM transactions, the charges will not be levied on normal UPI payments in shops and transfers between two individuals.
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