UPI deals over Rs 2000 to attract 1.1% fee; customers unaffected

Any Unified Payments Interface (UPI) transaction of more than Rs 2,000 via prepaid payment instruments (PPI) like online wallets or pre-loaded gift cards would attract an interchange fee of up to 1.1 per cent from Saturday (April 1, 2023), said the National Payments Corporation of India (NPCI) on Wednesday.

In a statement, NPCI said it has permitted the PPI wallets to be part of interoperable UPI ecosystem and levied 1.1 per cent charge on UPI transactions above Rs 2,000 while using PPI. "Interchange charges are only applicable for the PPI merchant transactions. However, no charge will be levied on the customers," NPCI clarified in the statement.

It is further clarified that there will be no charges for the bank account to bank account-based UPI payments (i.e. normal UPI payments). Interchange will not be applied in the case of peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions too.

The move is reportedly aimed at increasing revenue for banks and payment service providers, who have been struggling with the high cost of UPI transactions. The NPCI said that the interchange pricing will be reviewed by September 30, 2023.

Allaying confusion in customers' mind, Paytm also took to Twitter to clarify that customers will not have to shell out anything extra while making payments through the UPI mode. "Please be informed that Paytm UPI is free, fast, secure and seamless. No customer will have to pay any charges on making payments from UPI either from the bank account or PPI/Paytm Wallet," it tweeted.

After the new rules come into effect, customers can choose to use any bank account, RuPay Credit card and prepaid wallet on UPI-enabled apps.