UPI NOT FREE ANYMORE- 1.1% fee on UPI Transactions, But Who Pays That?
The National Payments Corporation of India (NPCI) recently released a circular in which it recommended a 1.1 per cent interchange fee on certain merchant UPI transactions above Rs 2,000, made using prepaid payment instruments (PPI) like online wallets.
As per the circular issued on March 24, the changes will come into effect from April 1, 2023 and the above pricing will be reviewed on or before September 30, 2023.
NPCI said in its circular that Peer-2-Peer (P2P) and Peer-2-Merchant (P2M) transactions between a bank account. And a PPI will not require an interchange fee. Read to know who pays the interchange fee recommended by NPCI.
Here are some points related to UPI transaction Fee:
1. The fee will not be applicable for person-to-person transactions or person-to-merchant transactions between a bank and the prepaid wallet. This means you don’t have to pay any additional fees for using UPI yet.
2. any UPI transactions of more than Rs 2,000 made via prepaid payment instruments (PPI) like online wallets or pre-loaded gift cards, etc, will carry an interchange fee. So no need to worry about the charges if you’re not using wallets!
3. The interchange fee is the fee to be paid to wallet issuers like banks, payment banks, etc by payment service providers like Paytm, PhonePe, Google Pay, etc. to cover the costs of accepting, processing, and authorizing transactions.
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Conclusion
The National Payments Corporation of India (NPCI), which manages the UPI platform, has introduced a 1.1% fee on UPI transactions for businesses with an annual turnover of more than Rs 50 crore. This fee is known as the “Merchant Discount Rate” or MDR.
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