Unified Payments Interface (UPI) transactions in India exceeding Rs. 2,000 ($24.30) will be charged at a 1.1% rate beginning April 1, 2023. The move is intended to increase the use of digital payments for smaller transactions while also generating revenue for banks and the National Payments Corporation of India. (NPCI). Transactions between banks and government entities, on the other hand, will be exempt from this fee. The NPCI announced the change in UPI transaction charges in March 2022, and banks have been preparing for its implementation since then.
According to the NPCI, the cost of the UPI transaction fee will be split equally between the bank of the person initiating the payment (payer) and the bank of the person receiving the payment. (payee). This means that each bank will be responsible for charging their customers half of the total transaction fee. In other words, if a customer makes a UPI transaction of Rs. 2,500 ($30.38) to a merchant, both the customer’s and the merchant’s banks will charge Rs. 13.75 ($0.17).
The new fees will be applied to both peer-to-peer and person-to-merchant transactions. However, the NPCI has stated that the fees will not apply to transactions made using mobile wallets or prepaid payment instruments. (PPIs).To help customers understand the new charges and avoid confusion, the NPCI has posted a list of frequently asked questions (FAQs) on its website. The FAQs address issues such as applicable fees, exemptions, and the effect on customers and merchants.
Overall, the new fees are expected to have a significant impact on India’s UPI transactions, which have increased rapidly in recent years. According to the NPCI, the move will help ensure the long-term viability of the UPI ecosystem and promote the growth of digital payments in India. Some experts, however, have expressed concern about the potential impact on small merchants and businesses, who may bear the brunt of the charges.
