(Full Details) UPI charges from 1st april 2023 above 2000 Rs Transaction

Starting April 1, 2023, the National Payments Corporation of India (NPCI) has announced that it will apply Prepaid Payment Instruments (PPI) fees to merchant transactions on Unified Payments Interface (UPI). Here are the key details you need to know:

  • For transactions above Rs 2,000 using PPIs on UPI, an interchange fee of 1.1% of the transaction value will be charged to cover the costs of accepting, processing, and authorizing transactions.
  • The interchange fee will be applicable in the range of 0.5-1.1% on various services. For example, an interchange fee of 0.5% will be applicable on fuel, 0.7% for telecom, utilities/post office, education, agriculture, 0.9% for supermarket, 1% for mutual fund, government, insurance, and railways.
  • However, the interchange fee will not be applicable on peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between a bank account and a PPI wallet.
  • The PPI issuer will pay the remitter bank approximately 15 basis points as a wallet-loading service charge.
  • Payments made via UPI, like Paytm, Phonepe, Google Pay, to friends, family or any other individual or a merchant’s bank account will not be affected by this interchange fee.
  • The proposed interchange fee is in line with the recommendations of the Committee on Payments and Market Infrastructures and the World Bank, which suggest an interchange fee of up to 1.15% for UPI transactions.
  • The final decision rests with the Reserve Bank of India (RBI), which is the core regulator of payment systems in India. The NPCI has submitted its proposal to the RBI and will have to wait to see whether the RBI will approve its recommendation.

It’s worth noting that UPI transactions have traditionally been linked to bank accounts in UPI-enabled apps, which accounts for over 99.9% of total UPI transactions. However, the introduction of interchange fees is aimed at increasing revenue for banks and payment service providers. While the fees may increase the cost of transactions for merchants, it remains to be seen whether the costs will be passed on to customers or absorbed by businesses. Ultimately, the decision on whether to approve the proposed interchange fee will be up to the RBI.

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