If you also use prepaid payment instruments (PPIs) such as online wallets or pre-loaded gift cards for easy payments, you may have to pay extra charges for UPI payments made through them from April 1.
National Payments Corporation of India (NPCI) has introduced an interchange charge of up to 1.1 percent on merchant UPI transactions done using prepaid payment instruments from April 1. It is being levied on UPI payments above Rs 2,000 made to online merchants, large merchants, and small merchants.
In such a situation, many questions arise that what is this interchange charge and whether it is going to be applicable in all types of online payments or whether it is going to affect a particular segment. Today we have come up with answers to questions related to this.
What is an interchange fee?
The interchange fee is a fee paid by payment service providers to wallet issuers such as banks. These wallets are mainly online payment enablers like Paytm, PhonePe, and Google Pay. Thus these fees are levied to cover the cost of accepting, processing, and authorizing transactions.
Will this fee apply to every UPI payment?
This Shukla will be levied in merchant UPI transactions as mentioned earlier. This means that person-to-person transactions or person-to-merchant transactions between the bank and the prepaid wallet will not be levied. This means that you can use UPI without any worries and for this, you will not have to pay any additional charges.
What will be the charging fee?
For UPI transactions above Rs 2,000 done through PPIs, an interchange fee of 1.1 percent is levied, which the issuer like Paytm or Google Pay has to pay to the bank as a wallet loading fee. Categories like fuel, education, agriculture, and utility payments have an interchange charge of 0.5-0.7 percent. At the same time, for food shops, specialized retail shops, and contractors, this fee is a maximum of 1.1.
What will be the effect on the general public?
The interchange fee is paid by the merchants to the wallet or card issuer. In such a situation, it will not affect small traders and shopkeepers who pay less than 2,000. However, in some cases, it is applicable to Wallet-on-UPI, depending on the capability and willingness of the payment companies.
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