UPI Merchant Transactions Over ₹2,000 To Carry Charge Of 1.1% From April 1, 2023

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The National Payments Corporation of India (NPCI) said that using Prepaid Payment Instruments (PPIs) for transactions through UPI will attract an interchange fee. The charges will be levied if the transaction is more than ₹2,000.

The National Payments Corporation of India (NPCI) has notified that an interchange fee of up to 1.1 per cent will be applicable on merchant UPI (Unified Payments Interface) transactions from April 1.

In a recent circular, the NPCI said that using Prepaid Payment Instruments (PPIs) for transactions through UPI will attract an interchange fee. The charges will be levied if the transaction is more than ₹ 2,000.

The interchange fee varies for the different categories of merchants. It ranges from 0.5% to 1.1% and a cap is also applicable in certain categories.

In a notification issued today, NPCI said that the introduced fee is only applicable for merchant transactions made through prepaid payment instruments. The payments body clarified that no charges will be levied on normal UPI payments which it termed as "bank account- to-bank account based UPI payments."

For telecom, education, and utilities/post office, the interchange fee is 0.7% while for supermarkets the fee is 0.9% of the transaction value. 1% charges will be levied for insurance, government, mutual funds, and railways, 0.5% for fuel, and 0.7 for agriculture, reported CNBC TV-18.

The charges will be applicable from April 1.

Interchange will not be applied in the case of Peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions. PPP issuers will be required to pay 15 basis points (bps) to the remitter bank as a wallet-loading charge for transactions of over ₹ 2,000.

The pricing will be reviewed by the NPCI on or before September 30, 2023.

In August last year, the Finance Ministry stated that UPI is a digital public good and that it was not considering levying any charges on transactions made through it. “UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means,” the ministry tweeted.

The statement had come after the RBI issued a discussion paper that said that UPI as a fund transfer system is like IMPS (Immediate Payment Service) and hence it could be argued that charges in UPI could be similar to those levied on IMPS fund transfers.

www.ndtv.com

UPI Merchant Transactions Over Rs 2,000 To Carry Charge Of 1.1% From April 1

The National Payments Corporation of India (NPCI) has notified that an interchange fee of up to 1.1 per cent will be applicable on merchant UPI transactions from April 1.
www.ndtv.com www.ndtv.com
 
So, what does this mean in simple words? A few key takeaways:

1- UPI payments made through PPIs -- read digital wallets like PayTM wallet -- will now attract 1.1 per cent fee if the value of the transaction is Rs 2000 or more.

2- The wallet transactions that are worth less than Rs 2000 will not attract this charge.

3- The fee will be levied on the merchant side. This means merchants may or may not choose to pass on the extra fee to consumers.

4- Regular UPI transactions, the ones that are made directly from bank account to bank account, remain free.

Source
 
If we buy anything in shop for less than 2000, then no need to pay that charge right?

Also if we are not using those "wallets", then need not pay extra fee.
What if the recipient is getting that amount into wallet? Such a scenario exists?
 
Ssreek said:
If we buy anything in shop for less than 2000, then no need to pay that charge right?

Also if we are not using those "wallets", then need not pay extra fee.
What if the recipient is getting that amount into wallet? Such a scenario exists?
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If you are not using wallet to pay then no fees are applicable no matter the amount, no matter if you are using paytm, phonepe etc.

From what I have seen almost everyone makes payment using their bank linked account so this won't affect almost anyone.

Who and why are people using these wallets? Can any wallet user explain why they use it?

vink said:
small shops will surely pass it on customers..
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Well that will discourage people from using these wallets and they might stop using them so to retain customers they might absorb the additional fees.
Edit: By they I mean wallet companies and not the small shop owner.
 
Banks: Give us your money for safekeeping. No one will be able to steal it

Also banks: here's an app for you to make transactions. Oh and we are no longer responsible if you get mugged and they force you to transfer money from your device that you always have in your pocket. But thanks for letting us earn money using your money

Carrying your entire savings in your pocket is the stupidest thing to force on public. Most can't even use smart phones properly. But yay Digital India
 
PradUp said:
If you are not using wallet to pay then no fees are applicable no matter the amount, no matter if you are using paytm, phonepe etc.

From what I have seen almost everyone makes payment using their bank linked account so this won't affect almost anyone.

Who and why are people using these wallets? Can any wallet user explain why they use it?


Well that will discourage people from using these wallets and they might stop using them so to retain customers they might absorb the additional fees.
Edit: By they I mean wallet companies and not the small shop owner.
Click to expand...

During covid times, I was in a different town. Somehow UPI used to fail most of the times. People used to say that it happens everyday in the evening. I didn't believe.
But many times it failed. So I tried using wallet in the app, and it was always successful and faster. Sometimes when UPI network is busy, wallet comes handy.

One more usage is, these apps give some points/cashback that comes only to wallet. So if you want to use that money, you gotta use that wallet.

Further, some apps force wallet load when we are trying to book tickets in irctc and pay through that app. I remember it used to happen in phone pe.

These are the only uses of wallet for me.
Now we have to see if these apps force us to use their wallet feature.
 
It creates more confusion, as merchants won't be willing to give 1.1% from profit. Letapart asking customer from where they are paying wallet or bank.
 
These people find new and ingenious ways to loot people,as if imposing tax upon tax on every possible thing wasn’t enough,soon they will start charging for the Air we breathe.
 
Most people posting one-liner frustrations here didn't even bother to read the actual thing!
It clearly says about wallets only. They were interoperable with UPI which is now chargeable. Bank account-to-account transfer is not impacted by this change.
Now I don't know how many of you trust wallets like Paytm more so as to keep all your life savings in wallets rather than your account. If not then this does not impact you in any way.
 
lockhrt999 said:
But the question is how will the shops know if the customer paid through wallet or bank account?
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Wallets have their own transaction ID for using the bank api for such things, so no doubt, the banks will know who uses which wallet.
pepg28 said:
These people find new and ingenious ways to loot people,as if imposing tax upon tax on every possible thing wasn’t enough,soon they will start charging for the Air we breathe.
Click to expand...
Sitaraman says thanks.

Don't post such ideas on Twitter or FB etc, these people will really do it!!
 
6pack said:
Wallets have their own transaction ID for using the bank api for such things, so no doubt, the banks will know who uses which wallet.
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Yes, but how will a shop owner know that in real time? Somehow he must be told that some of the transitions are being charged fee so that he can pass it on the customer.
 
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