Big change in UPI payment charges from April 1| Know THIS before making digital payments via Google Pay, PayTM and other apps |
The National Payments Corporation of India (NPCI) has announced a major change in the charges for digital payments through prepaid payment instruments (PPIs) such as mobile wallets like Google Pay, PayTM, and other similar apps. The NPCI has set an interchange fee of 1.1% for all merchant transactions initiated on the Unified Payments Interface (UPI) network, effective from April 1. This decision could have a significant impact on digital payments in the country, and users need to be aware of the changes to avoid any inconvenience.
In this article, we will explain everything you need to know about the new charges for UPI payments through PPIs, including how the charges will be applied, who will be affected, and how it could impact digital payments in India.
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The NPCI's new charges for UPI payments through PPIs
The NPCI circular dated March 24, 2023, announced the new charges for UPI payments through PPIs. According to the circular, a 1.1% surcharge will be applicable for transactions valued over Rs. 2,000. The interchange fee will be applied to all merchant transactions initiated on the UPI network.
The NPCI has also introduced different merchant fee structures for PPI payments on UPI, depending on the industry. However, the interchange fee will not apply to P2P (peer-to-peer) and P2M (peer-to-merchant) transactions between a bank account and the PPI wallet.
How the new charges will affect users
The changes will be applicable if users use UPI to load their wallets with amounts above Rs. 2,000. According to the NPCI directive, the issuer of PPI will have to pay 15 bps (basis points) as a wallet-loading service charge to the account holder's bank for transactions above Rs. 2,000.
This means that users will have to pay an additional 1.1% surcharge for transactions over Rs. 2,000. This could impact users who frequently make large transactions through PPIs. However, it is important to note that the surcharge will not be applicable to P2P and P2M transactions.
How the new charges could impact digital payments in India
The NPCI's decision to introduce a new interchange fee for UPI payments through PPIs could impact the usage of digital payments in India. It could make it less attractive for users to make large transactions through mobile wallets, which could result in a decline in the usage of PPIs.
However, it is important to note that the NPCI's decision to introduce the interchange fee is aimed at promoting digital payments through bank accounts, which is a more secure and reliable mode of payment. It could also reduce the burden on merchants, who have to pay a higher fee for accepting payments through PPIs.