The National Payments Corporation of India (NPCI) recently released a circular in which it has recommended a 1.1% interchange fee on certain merchant UPI transactions above Rs 2,000 made through prepaid payment instruments (PPI) like online wallets.
Chaos unfolded as a lot of people were confused because NPCI informed in the circular that changes will come into effect from April 1, 2023. UPI has been the most preferred mode of digital payment because it offers free, fast, secure and seamless experience, and every month, over 8 billion transactions are processed free for customers and merchants using bank-accounts.
Several news reports surfaced that there will be a massive change for the UPI customers in transactions. NPCI has recommended, true, but who actually pays the interchange fee? Will customers bear the brunt of this? The answer is no.
NPCI said in its circular that Peer-2-Peer (P2P) and Peer-2-Merchant (P2PM) transactions between a bank account and Prepaid Payment Instruments will not require an interchange fee. Regarding recent regulatory guidelines, NPCI clarified that 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.
PayTm also took to Twitter to clarify that regarding NPCI circular on interchange fees and wallet interoperability, no customer will pay any charges on making payments from UPI either from bank account or PPI and Paytm Wallet.