Recently the National Payments Corporation of India (NPCI), which governs UPI, intimated the banks that they can now levy charges on merchant transactions made through Prepaid Instrument wallets using UPI.
- Later, the NPCI issued a clarification stating that normal bank-to-bank UPI transactions will not be charged and that customers will not have to pay for transactions made via PPI on UPI.
- It said that the new interchange charges are only applicable for Prepaid Payment Instruments’ (PPI) merchant transactions.
- The interchange fee, generally associated with card payments to cover the transaction cost, has now brought PPI wallets also under its fold.
About Prepaid Payment Instruments (PPIs)
- Prepaid Payment Instruments (PPIs) are payment methods that can be used to purchase goods and services and send/receive money by using the stored value in the wallet.
- Users have to pre-load the wallet with a desired amount. The amount can be loaded/reloaded against cash or through debit to bank account, or by using credit/debit cards, UPI, or any other approved payment method in India.
- PPIs can only be used in Indian rupees.
- PPIs can be in the form of mobile wallets, physical smart cards, secure tokens, vouchers, or any other method that allows access to prepaid funds.
- The RBI has mandated interoperability among different PPI issuers.
- After linking one’s PPI wallet to UPI, customers can transact using Scan and Pay on all UPI interoperable QR codes. This will enable the use of PPI wallets at all merchant locations.
- Now, for using prepaid payment instruments (PPIs) such as gift cards, wallets etc for transactions on UPI, an interchange fee of up to 1.1% has been levied from April 1, 2023. The charges are applicable if the transaction is more than Rs. 2,000.
- If a person is a merchant and accepting UPI payments from a customer’s bank account, then there are no charges applicable.
- Charges are applicable only if you have accepted or consented for the transactions made using PPI Wallet. Officially there are no charges to be paid by the customer. However, merchants may pass on the additional burden to customers by way of price increase or some other means.
(Source: The Hindu)
