UPI transaction: On Unified Payments Interface (UPI) transactions of more than Rs 2,000 made using Prepaid Payment Instruments, the National Payments Corporation of India (NPCI) has recommended an interchange fee (PPIs). According to reports, the change is intended to boost revenue for banks and payment service providers, who have reportedly been having trouble making ends meet due to the high cost of UPI transactions. From April 1, a fee will be charged, and by September 30, 2023, the interchange rate will be revised.
- UPI payments done using PPIs, or online wallets like PayTM, will henceforth be charged a 1.1% fee if the transaction value is Rs 2000 or over.
- Transactions made through a wallet that total less than Rs 2000 will not be subject to this fees.
- The merchant side will be charged the fee. This implies that businesses may or may not decide to charge customers more.
- Normal UPI transactions, or those made from one bank account to another, are still free.
UPI is currently the most popular and widely utilised payment method
In India, UPI is currently the most popular and widely utilised payment method for customers to immediately transfer money between bank accounts via their smartphones. In contrast, PPIs are online wallets that let users save money and send payments. In India, PPIs like Paytm, PhonePe, and Google Pay are available. An interchange fee is a cost incurred by one bank while executing a transaction with another bank. The bank of the merchant (the person or business receiving the payment) pays the bank of the payer the interchange fee in the case of UPI transactions (the person making the payment).