How many fees are levied on UPI payments? NPCI, the national payments corporation of India, notifies that the interchange charges lie up to 1.1 % on merchant UPI transactions from 1 April 2023. According to the latest news, the NPCI said that using prepaid payment instruments by UPI attracts interchange fees. The charges are applied if the transaction is over Rs 2000.
The interchange fee differs for the various categories of merchants. It lies from 0.5% to 1.1%, and the cap is associated with some categories. In the latest information, NPCI said that introductory see applicable only to merchant transactions made by prepaid payment instruments. Read this post to know more about the fees levied on UPI payments.
Key takeaways to understand the UPI fees properly
- UPI payments that are made by PPIs are read digital wallets like PayTM wallet and attract the 1.1% fee if the transactional value is Rs 2000 or over it
- The transactions made by your wallet that are worth less than Rs 2000 do not attract the charges.
- The fee is applied on the merchant side. It means the merchants may or not choose to pay extra fees to customers.
- Regular transactions of UPI that are made from the bank directly are free from the extra fees.
When the charges on UPI payments applied
It has been clarified by the payment body that there are no changes applied if you make the normal UPI payments. It is considered as the bank account to bank account UPI payments.
For education, telecom, and post office, the interchange fee to make UPI payments is 0.7%. On the other hand, the interchange fee to make UPI payments by supermarkets is 0.9%. Also, there are 1% charges that will be applied to government, insurance, mutual funds, and railways, 0.7 for agriculture, and 0.5 to fuel. These charges will be applicable on UPI payments from April 1.
When the interchange fees are not applied
Interchanges are not levied if you make the peer to peer merchant transactions. PPP issues will need to pay 15 points basis to the remitter bank as a loading wallet charge for transactions of more than Rs 2000. Such pricing will be determined by NPCI on or before 30 September 2023.
Last year, the Finance Ministry said that the UPI is a public online good and there is no need to levied any charges on transactions made by it. It is an online public good with immense convenience for productivity and public gains for the economy.
There is no government consideration in this to apply charges for UPI payments. The service concern providers for cost recovery has to be met by other means, tweets by the ministry.
Conclusion
The statement came when the discussion paper was issued by RBI. It said that UPI works like the fund transfer system, and it is like arguments on charges in UPI that are the same as charges levied on IMPS fund transfers.
