UPI New Rules: According to a recent circular from the NPCI, if UPI transaction of more than Rs.2,000 is done through Prepaid Payment Instruments (PPIs), then an interchange charge of up to 1.1% would be levied on merchant from April 1.
UPI Charges News: What does this mean?
Traditionally, the most preferred method of UPI transactions is linking the Bank account in any UPI-enabled app for making payments. This method contributes over 99.9 per cent of total UPI transactions. These Bank account-to-account transactions will remain free for Customers and Merchants.
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UPI Charges News: What is the new rule?
As per the new rule, the interchange charges are applicable only for Prepaid Payment Instruments (PPI). This means an interchange fee of 1.1 per cent will be applicable only when the UPI transactions are made via PPIs such as wallets and credit cards. The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account-based UPI payments (i.e. normal UPI payments). Also, the contribution of PPI in total UPI transactions is less than 1 per cent.
UPI Transactions Data
The value of UPI transactions fell 4.9 per cent in February to ₹12.35 lakh crore owing to a 6.6 per cent reduction in the number of transactions to 750 crore. In January, the platform had seen a record 803 crore transactions worth ₹12.98 lakh crore. UPI transactions usually trend lower in February compared with other months, owing to the fewer days in the month, industry players said.
As such, the volume of UPI transactions was higher by 66.4 per cent YoY and the transaction amount was higher by 49.5 per cent. The network has processed around 7,502 crore transactions worth ₹125 lakh crore in FY23 so far. During 2022, the platform saw around 7,404 crore transactions worth ₹126 lakh crore.
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What is UPI?
Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI). It is used on mobile devices to instantly transfer funds between two bank accounts. It was launched on 11 April 2016.