NPCI clarifies no charges on customer for normal UPI transactions

The National Payments Corporation of India (NPCI) has suggested that United Payments Interface (UPI) transactions made via prepaid instruments, such as wallets will attract an interchange fee of 1.1 per cent for certain merchant payments from April 1, 2023. The 1.1 per cent interchange fee will be levied only on merchant payments of above Rs 2,000 to specified merchant categories, according to a circular by NPCI dated March 24, 2023. However, there will be no fee if the transaction amount is up  2000.

The interchange fee will not be applicable to peer-to-peer (P2P) transactions or peer-to-peer-merchant (P2PM) transactions between a bank and the prepaid wallet, said NPCI. P2PM is the NPCI classification for small businesses which have a projected monthly inward UPI transaction of less than or equal to Rs 50,000. So, if you are sending money to friends, family or any other individual or a small business merchant's bank account, it will not attract an interchange fee.

Which UPI payments will attract an interchange fee?

As stated by the NPCI, only certain merchant transactions made by prepaid payment instruments will attract the interchange fee. Wallets, smart cards, vouchers, magnetised chips come under prepaid payment instruments. A few examples of wallets are the Paytm wallet, PhonePe wallet, Amazon Pay, MobiKwik wallet, SODEXO vouchers.