PPI Merchant UPI Transactions over Rs.2000 now have charges! Explained

UPI has been creating waves in the digital payments space. Since its launch in 2016, UPI has been successful to garner a large market share of the payments market in India. Reportedly, UPI enabled over 2000 transactions every second in the year 2022. However, despite such tremendous demand and development, UPI transactions were always free until now. National Payments Corporation of India (NPCI) has announced that UPI transactions above Rs.2000 will now apply charges of 1.1% from April 1st, 2023. Below is a list of Prepaid Payments Interface (PPI) and their UPI Charges.

Unified Payments Interface (UPI) will soon cease to be free as NPCI has now announced charges to levy on UPI transactions above Rs.2000 for all online merchants, large merchants, and small offline merchants. These UPI charges will come into effect starting from April 1st, 2023 and the National Payments Corporation of India will review these new UPI charges by September 30th this year.

The introduction of interchange is in the range of 0.5% to 1.1% and the following are the charges and fees on different types of prepaid payments. Here is a list of Types of UPI Payments and their UPI Charges.

The good news is that not all UPI transactions levy charges. Only select prepaid UPI transactions will have charges. As per NPCI, the UPI transaction fees will be levied only on PPI merchant transactions. Peer-to-Peer transactions (P2P), and Peer to Merchant (P2M) (between a bank account and a PPI wallet) are exempted from charges.

Commenting on the same, NPCI said the following:

“The PPI issuer will have to pay 15 basis points as an advanced wallet loading service charge to the remitter bank for loading transaction values that are greater than the said amount (Rs 2,000), but an interchange won’t be applicable in terms of peer-to-peer (P2P) and peer-to-merchant (P2M) transactions between a bank account and a PPI wallet.”

UPI recently launched UPI Lite to disrupt the offline payments market in India and is expanding the service to other foreign countries including the US, Singapore, Australia, Canada, and others. There’s no doubt, that UPI has done significant progress in a concise period of time. It’s been a long debate about whether UPI should levy charges or not since while we consumers were exempted from the charges, banks had to bear crores of cost each year for allowing the service.

NPCI has finally passed a circular stating that from April 1st, UPI transactions will have an interchange at a rate of up to 1.1% (maximum upper limit)

Thanks to @abhishek012 for also sharing this news with us. You can check out the thread to read the views of our dimers and community - NPCI Recommends UPI fees and charges above Rs.2000.

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