Image is used for representation purpose only. | Photo Credit: Kamal Narang
From April 1, 2023, merchant transactions above ₹2,000 made through Prepaid Payment Instrument Wallets (PPI Wallets) on UPI will attract an interchange charge of 1.1%. It is authorized by the National Payments Corporation of India (NPCI) which manages UPI.
However, a fee is charged for normal UPI transactions.
An Interchange fee is usually associated with card payments to cover the cost of the transaction.
In a statement, NCPI said in accordance with recent regulatory guidelines, PPI Wallets have been authorized to be part of the interoperable UPI ecosystem.
“The interchange charges introduced are only applicable for PPI merchant transactions. And at no cost to customers.”
“It is further clarified that there are no charges for bank account on bank account based UPI payment (normal UPI payments),” NPCI said.
The banks remained tight-lipped to comment on this issue.
Rajsri Rengan, India Head of Development, Banking and Payments, at FIS in a statement said, “The new interoperability guidelines for prepaid payment instruments announced by NPCI is a significant step towards building a more inclusive and seamless that digital payments ecosystem in India.”
“The interoperability of digital wallets and UPI can be a game-changer for the Indian fintech industry, as it opens up new opportunities for innovation, growth and competition. With greater interoperability between payment systems, consumers will have more choice and flexibility in how they transact with merchants, leading to increased use of digital payments and ultimately driving the financial inclusion and economic growth,” the statement said.
“This move will also encourage innovation in the digital payments space, strengthening competition and improving the quality of services offered to consumers,” the statement added.
“We believe this is a positive development for the Indian economy and the banking system as a whole, and we look forward to continuing to support the growth and development of digital payments in India,” the statement added. .