The National Payments Corporation of India (NPCI) has issued a circular in which it suggested “Prepaid Payment Instruments (PPI)” fees on merchant transactions on Unified Payments Interface (UPI).
The governing body of the UPI payment system added that the PPI fees would be levied on transactions above ₹2,000 on UPI. It will result in an interchange at 1.1% of the transaction value.
However, NPCI has clarified that there will be no bank account fees for bank account-based UPI payments or regular UPI payments.
With this addition to UPI, customers will have the choice to use any bank account, RuPay credit card, and prepaid wallet on UPI-enabled apps, he said.
Exchange fees are charged to cover the costs of accepting, processing, and authorizing transactions.
This can make the transaction more expensive. The new rule will be in effect from April 1. Customers will not have to pay fees, Paytm added. Taking to Twitter, the digital payments app wrote: “Please note that Paytm UPI is free, fast, secure and transparent. No customer will pay any fees to make payments from UPI, whether from a bank account or a PPI/Paytm wallet.”
The issuer of prepaid instruments will also be required to pay 15 basis points of the fee to the remitter bank for loading a transaction value above ₹2,000, the circular said.
Notably, the fee will not be applicable to person-to-person transactions or person-to-merchant transactions between a bank and the prepaid wallet.