According a recent circular, the National Payments Corporation of India (NPCI) has decided to charge PPI (Prepaid Payment Instruments) fees on UPI (Unified Payments Interface) to all the merchant transactions above Rs 2,000, starting from 1 April 2023.
As per NPCI, the governing body of UPI, "For amounts over Rs 2,000, using PPIs on UPI will result in interchange at 1.1 per cent of the transaction value."
Customers must remember that the interchange fee is generally connected to card payments and is assessed to defray the expenses of transaction acceptance, processing, and authorisation.
NPCI will assess the stated interchange price prior to 30 September 2023. When the additional charges will be put into effect, the PPI issuer will be required to pay the remitter bank a wallet-loading service fee of around 15 basis points. No interchange will be applicable to the bank account and the PPI wallet with regards to peer-to-peer (P2P) or peer-to-peer-merchant (P2PM) transactions.
Although the interchange fee of 1.1 percent is applicable in general levy, a lesser interchange levy will be applicable to some merchant categories. For example, the interchange rate for payments made via UPI to fuel service stations using a prepaid instrument will only be 0.5 percent.
The interchange falls is in the range of 0.5 to 1.1 percent. There is an interchange of 0.5 percent on fuel; 0.7 percent on telecom, utilities/post office, education, and agriculture; 0.9 per cent for supermarket; and 1 percent for mutual fund, government, insurance and railways.
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