New Delhi: Ever since UPI regulatory body National Payment corporation of India’s (NPCI) circular on UPI came out, online media has been flooded with reports claiming that UPI transactions over Rs 2,000 will be charged at 1.1%. Busting the media reports, PIB in its latest fact check tweet has said that the above claims are misleading. These reports don’t affirm to the real crux of the NCPI circulation.


ALSO READ | BharatPe Co-Founder, Shark Tank Fame Ashneer Grover's Father Dies At 69


COMMERCIAL BREAK
SCROLL TO CONTINUE READING

PIB has tweeted, “there is no charge on normal UPI transactions”.


It further clarified that circular is about transactions using Prepaid Payment Instruments (PPI) like digital wallets. 99.9% transactions are not PPI.


"Recent regulatory guidelines, the Prepaid Payment Instruments (PPI Wallets) have been permitted to be part of interoperable UPI ecosystem. In view of this NPCI has now permitted the PPI wallets to be part of interoperable UPI ecosystem. The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account based UPI payments (i.e. normal UPI payments)," said an NCPI release.


ALSO READ | NCLAT Upholds Rs 1,337.76 Cr Fine On Tech Giant For Anti-Competitive Practice




Clarifying the NPCI release, Ramesh Narasimhan, CEO, Worldline India said, “The interchange fee has been introduced by NPCI for P2M transactions only (for greater than 2K value) that will happen on the wallet in the UPI framework. Currently, these wallets are serviced independently by the respective PPI issuers and interchange was also managed by each of them independently. This interoperable program shall now rationalise the interchange for P2M transaction and bring it under NPCI governance.”


“It is to be noted that the interchange circular will not have any impact on the UPI transactions in any manner. It is only rationalising the interchange on wallets and bringing it under the scope of NPCI. The other advantage is that going forward all wallets will be available from all banks who support UPI acquiring as it will be part of the stack (UPI, RuPay Credit Card and PPI Wallets),” he added.


Let’s understand NPCI circular and its impact on customers in simple terms.


What are Prepaid Payment Instruments (PPIs)?


Online wallets, smart vouchers, smart cards, and many more are prepaid payment instruments (PPIs). They keep a particular prepaid amount that users can use to purchase items, mobile recharge, etc. For instance, Paytm wallet is an example of PPI.


What does NPCI circular say?


According to the new circular of NPCI, a charge of 1.1% will be applicable on UPI transactions over Rs 2000 done via prepaid payment instrument from April 1, 2023. It will also be applied on loading money in wallets via UPI. There are no charges for bank to bank transfer via UPI. 


Who will pay the interchange fee?


The merchant will pay to the receiver bank/payment provider on UPI transactions over Rs 2000 done via PPIs from April 1, 2023. Customers will not pay any amount on that.


What is a PPI payment via UPI?


Suppose, if you are doing a payment to a merchant via Paytm wallet. Once you scan the merchant’s QR code, it will allow you to direclty pay to the merchant’s bank account. So from April onwards, an interchange fee of up to 1.1% will be levied on transactions above Rs 2000 that the merchant has to pay, not you.


Does loading money in the wallets also attract the charges and do you have to pay?


NPCI circular also mentioned that an interchange fee up will be levied while transferring money to third-party wallets like Paytm, Phonepe, etc. Right now, you don’t have to pay that charge until and unless these third-party providers decide to pass on the charge to users.


Unified Payment Interface (UPI), a real-time mobile payment system that allows bank to bank transfer, has become the backbone of digital India. From payment transfer to tens of thousands to Rs 5-10 payment to tea shops, UPI has transformed the Indian economy drastically in the past few years. One of the reasons that links to the success of UPI's fabulous growth is no charges of transactions from peer-to-peer or peer-to-merchant until now. NPCI is all set to go away with free days of UPI.