The National Payments Corporation of India (NPCI) issued a circular in which it advised Prepaid Payment Instruments fees to be applied to merchant transactions on Unified Payment Interface (UPI) from April 1. The PPI fees of 1.1 per cent would be charged on transactions above ₹ 2,000 on UPI. This fee is levied to cover the costs of accepting, processing and authorizing transactions.
This charge will be on merchant transactions and will likely make transactions costlier. The new rule is to be implemented from April 1.
According to the circular, the issuer of prepaid instruments will have to pay 15 basis points of the fee to the remitter bank for transactions above ₹ 2,000.
Interchange fee
The introduction of interchange will be in the range of 0.5 to 1.1 per cent, with interchanges for fuel at 0.5 per cent, telecom at 0.7 per cent, post office, agriculture and education at 0.9 per cent and mutual fund, government, insurance, railway at 1 per cent.
Interchange fee is generally associated with card payments and is charged to cover the cost of accepting, authorising and processing transactions.
What are PPIs?
To those not aware PPIs are online wallets like BHIM, Google Pay, PayTm that are used for purchase of goods, services or conduct financial services.
Where will the surcharge not be applicable?
The charge will not be applicable to person-to-person transactions or person-to-merchant transactions between bank account and the prepaid wallet.
The UPI's governing body is expected to review the stated charge on or before September 30.
