Relax! You Won’t Be Charged Extra for UPI Transactions: NPCI
Written by Sanjay Kumar
Don’t worry if you received a WhatsApp forward stating that you will have to pay a fee for online transactions on UPI. Such messages are misleading and false.
The National Payment Corporation of India (NPCI) has issued a statement via its official Twitter handle clarifying that customers are not charged for UPI transactions. According to the rule, interchange charges are only applicable for Prepaid Payment Instruments (PPI). This means that UPI transactions made via PPIs such as wallets or credit cards will have an interchange fee of 1.1 percent.
Bank account to bank account UPI payments are free of charge. “With this addition to UPI, the customers will have the choice of using any bank accounts, Rupay Credit card and prepaid wallets on UPI enabled apps,” NPCI’s Twitter post further clarifies.
“UPI is free, fast, secure and seamless. Every month, over 8 billion transactions are processed free for customers and merchants using bank-accounts,” NPCI says.
NPCI Press Release: UPI is free, fast, secure and seamless
Every month, over 8 billion transactions are processed free for customers and merchants using bank-accounts@EconomicTimes @FinancialXpress @businessline @bsindia @livemint @moneycontrolcom @timesofindia @dilipasbe pic.twitter.com/VpsdUt5u7U— NPCI (@NPCI_NPCI) March 29, 2023
Here’s an FAQ answering all your queries:
Will customers be charged for UPI payments?
According to a circular issued by NPCI, interchange charges have been implemented only for PPI merchant transactions, and customers will not be charged. It has also been explicitly stated that bank account to bank account-based UPI payments (i.e., regular UPI payments) will not incur any charges.
How will consumers benefit?
With this addition of UPI, customers will have the option of using any bank account, RuPay credit card and prepaid wallet on UPI-enabled apps.
“The NPCI circular will make wallets more appealing to customers by opening up newer use cases of payments. It will eliminate the need for customers to carry multiple cards, thereby reducing fraud and theft due to the exposure of card numbers,” said Akash Sinha, Co-founder & CEO at Cashfree Payments.
How will merchants benefit?
Wallets are commonly used by numerous merchants to accept customer payments, especially at PoS. Interoperability will greatly simplify payment collection for them as it will enable merchants to accept wallet payments irrespective of the type of wallet used by the customer.
“Further, it will eliminate the need for specific integrations with a particular wallet to accept payments on a website since customers can also pay via UPI or card infrastructure. This will increase the payment alternatives for customers. The interoperability of wallets with UPI will catalyse the progress of digital payments, enhancing the customer experience,” Sinha told CNBC-TV18.com.
Here’s all you to know
The interchange charge being discussed will be paid by the merchant to the wallet issuer. To understand this, let’s take an example where a customer shops for more than INR 2000 at a store. In this case, the customer will transfer the exact amount via UPI. However, if the customer transfers money from one bank account to another, it will be free.
But if the customer adds money to a wallet and then scans the UPI QR code at the store to make the transaction, then after April 1st, a fee of 1.1% of the transaction amount can be deducted from the merchant’s account as an interchange charge. In total, this will not have any effect on the customers.
To put it simply, this is a matter that is completely related to the merchant and the bank.