- Starting from April 1, merchants carrying out transactions through the Unified Payments Interface (UPI) using Prepaid Payment Instruments (PPI) will be subjected to charges, according to a circular issued by the National Payments Corporation of India (NPCI).
- As per the circular issued on March 24, the changes will come into effect from April 1, 2023 and the above pricing will be reviewed on or before September 30, 2023.
- For merchant categories under industry programs, the interchange fee is different. In addition, a wallet-loading service charge of approximately 15 basis points will be paid by the PPI issuer to the remitter bank, but no interchange fee will be applied to peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between bank accounts and PPI wallets.
- As per the NPCI’s circular, the interchange fee of 1.1 per cent will have no impact on the end-customer and UPI transactions will remain free for them.
- NPCI said in its circular that Peer-2-Peer (P2P) and Peer-2-Merchant (P2PM) transactions between a bank account and a PPI will not require an interchange fee.
- Essentially, this fee will only apply to digital wallet transactions made via merchant QR codes, which are likely to be paid by the merchant acquirer to the wallet issuer.
- Therefore, neither the merchant nor the customer is directly impacted by the interchange fee.
National Payments Corporation of India (NPCI) recommends PPI charges for UPI payments
