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.
