There is now a preparation to levy charges on UPI payments.

UPI payments made to merchants through prepaid instruments such as wallets or cards will attract an interchange fee of 1.1%.

According to a circular by UPI's governing body National Payments Corporation of India (NPCI), online merchants, large merchants and small offline merchants will be charged 1.1% interchange fee for transactions above Rs 2,000.

According to the news of BQPrimeHindi, it has also been said in the circular that the issuer of prepaid instruments (PPIs Issuer) will have to pay 15 basis points as fee to the remitter bank for loading the transaction value above Rs 2,000.

This means that suppose Paytm is a PPIs issuer, the customer puts Rs 2500 from SBI account into the wallet, then Paytm remitter bank will pay 15 bps to SBI for loading the transaction.

Interchange fees are generally associated with card payments and are levied to cover the cost of the transaction.

What will be the effect on the common user?

Now the question arises whether this fee will have to be paid by the common user, then the answer is no.

This is not applicable for peer-to-peer (P2P), peer-to-merchant (P2M) transactions between bank account and PPI wallet.

It means that if I pay any person, any shopkeeper, then I do not have to pay any fee.

1.1% is the highest fee, there are many merchants who will have to pay less interchange fee than this.

For example, if UPI payment is made using petrol pump prepaid instrument, then the interchange fee will be 0.5%.

Similarly, there are different interchange fees on mutual funds, insurance, utilities, education payments.

UPI payments made to merchants through prepaid instruments such as wallets or cards will attract an interchange fee of 1.1%.

Interchange fee on payments above ₹2,000

According to a circular by UPI's governing body National Payments Corporation of India (NPCI), online merchants, large merchants and small offline merchants will be charged 1.1% interchange fee for transactions above ₹2,000 .

It has also been said in the circular that the issuer of prepaid instruments (PPIs issuer) will have to pay 15 basis points as fee to the remitter bank for loading the transaction value above Rs 2,000.

This means that suppose Paytm is a PPIs issuer, the customer puts Rs 2500 from SBI account into the wallet, then Paytm remitter bank will pay 15 bps to SBI for loading the transaction.

Interchange fees are generally associated with card payments and are levied to cover the cost of the transaction.

What will be the effect on the common user?

Now the question arises whether this fee will have to be paid by the common user, then the answer is no.

This is not applicable for peer-to-peer (P2P), peer-to-merchant (P2M) transactions between bank account and PPI wallet.

It means that if I pay any person, any shopkeeper, then I do not have to pay any fee.

1.1% is the highest fee, there are many merchants who will have to pay less interchange fee than this.

For example, if UPI payment is made using petrol pump prepaid instrument, then the interchange fee will be 0.5%.

Similarly, there are different interchange fees on mutual funds, insurance, utilities, education payments.