Soumya Prakash Pradhan

From 1st April 2023, transactions over 2000 rupees made through UPI payments will incur a charge of 1.1%.

However, there has been some confusion among consumers and merchants about who will be responsible for paying these fees.

So, who will bear the cost of these UPI payment fees, and what it means for both consumers and merchants. Check below:

Who pays for UPI payment fees?

Many people have been wondering who will be responsible for paying the 1.1% fees associated with UPI payments over 2000 rupees.

The National Payments Corporation of India (NPCI) has clarified that these fees will be charged only to the merchant, and not the consumer.

This means that consumers will not have to pay any additional fees for making UPI payments.

However, it is important to note that UPI payments are not just limited to merchant transactions.

Bank-to-bank transfers, as well as payments to individuals, are also possible through UPI payments.

For example, if you were to pay a friend through a digital payment application like Google Pay or PhonePe, you would not be charged any fees.

What about digital wallets and prepaid payment instruments?

Digital wallets like Paytm and Rupay credit cards have also integrated UPI payments as a mode of transaction.

When a user makes a payment through these wallets to a merchant's bank account, the merchant will be charged an interchange fee of 1.1%.

However, if you are a consumer using a digital wallet or prepaid payment instrument, you will not have to pay any fees.

It is important to note that these fees are not fixed and can vary from merchant to merchant. For specific industries, charges can range from 0.50% to 1.1% of the transaction value.

Merchants are responsible for paying these charges, and they cannot be collected from customers.