UPI Transactions Above 2000 To Be Charged From 1st April

UPI transactions exceeding ₹ 2,000 will be billed 1.1% beginning April 1

More than ₹ 2,000 UPI Merchant Transactions Will Be Subject to a Charge; Customers are not charged for anything.

According to the National Payments Corporation of India (NPCI), using Prepaid Payment Instruments (PPIs) for UPI transactions will impose an interchange fee. If the payment surpasses ₹ 2,000, fees will be applied.

The National Payments Corporation of India (NPCI) has announced that beginning April 1, an interconnect service charge of up to 1.1% will be levied on merchant UPI (Unified Payments Interface) transactions.

According to a recent circular from the NPCI, using Prepaid Payment Instruments (PPIs) for UPI transactions will incur an interconnection surcharge. If the transaction exceeds ₹ 2,000, fees will be applied.

Different types of merchants pay different interchange fees. A cap is also applicable in some categories and ranges from 0.5% to 1.1%.

The newly introduced fee, according to a notification from NPCI today, only applies to merchant transactions carried out using prepaid payment instruments. The payments organization made it clear that no fees will be applied to regular UPI payments, also known as “bank account-to-bank account-based UPI payments.”

While supermarkets pay a fee of 0.9% of the transaction value, schools, utilities/post offices, and telecoms all charge an interchange fee of 0.7%. Insurance, railways, government, and mutual funds will face 1% charges, 0.7% for agriculture, and 0.5% for fuel, according to CNBC TV-18.

The fees will go into effect on April 1.

Transactions between a bank account and a PPI wallet that are peer-to-peer (P2P) or peer-to-peer-merchant (P2PM) would not be subject to the interchange fee. For wallet-loading service charges, the PPI issuer will pay the remitter bank approximately 15 basis points. Therefore, this interchange service charge will not apply to payments made using UPI, such as Paytm, Phonepe, or Google Pay, to friends, family, or any other person or merchant’s bank account.

By September 30, 2023, at the latest, the NPCI will have reviewed the pricing.

UPI is a digital public good, according to a statement made by the Finance Ministry in August of last year, and no fees are being considered for transactions conducted through it. “A digital public good, UPI provides the public with great convenience and increases economic output. The government is not considering charging for UPI services. Other methods must be used to address service providers’ concerns about cost recovery,” the ministry tweeted.

The statement was made in response to RBI’s discussion paper, which claimed that because UPI is a fund transfer system similar to IMPS (Immediate Payment Service), fees associated with UPI fund transfers may be comparable to those associated with IMPS fund transfers.