A headline regarding UPI payments took all of us by surprise as from 1st April 2023, there will be a 1.1% fee impose on transactions above ₹2,000. So, we did not know who will pay the extra amount.
And what if you have told that you, as a customer, would be paying the fee, you have misled.
The National Payment Corporation of India (NPCI) share on Twitter that no charges will be applied to customers using the online transaction to pay while buying clothes, groceries or anything else.
BREAKING NEWS : No Charge on Normal UPI Payments, 1.1 Percent Fee to Be Levied on PPI Merchant Transactions: NPCI— 2YoDoINDIA News Network (@2yodoindia) March 29, 2023
For more news visit https://t.co/98KV4yIruC#2YoDoINDIA #NPCI #UPI #PPI #India #DigitalPayments pic.twitter.com/POxbyQrmxn
What is the Truth Behind Fee On UPI Transactions?
As per new guidelines, interchange charges are applicable for Prepaid Payment Instruments (PPI).
So, whatever transactions will happen via credit cards, wallets like PhonePe, Amazon, Paytm, SODEXO, MobiKwik and many others will be charge 1.1% of the amount.
Many people do not know is that there will be no charges impose for the bank to bank transfer using UPI payments.
As per tweet read :
“With this addition to UPI, the customers will have a choice of using any bank accounts, Rupay Credit card and prepaid wallets on UPI-enabled apps.”
NPCI has also posting :
“UPI is free, fast, secure and seamless. Every month, over 8 billion transactions and processed free for customers and merchants using bank accounts.”
NPCI Press Release: UPI is free, fast, secure and seamless— NPCI (@NPCI_NPCI) March 29, 2023
Every month, over 8 billion transactions are processed free for customers and merchants using bank-accounts@EconomicTimes @FinancialXpress @businessline @bsindia @livemint @moneycontrolcom @timesofindia @dilipasbe pic.twitter.com/VpsdUt5u7U
What will be Charge For Sending Money To Friends and Family?
Answer is “No“.
The fee will not be impose on transactions between two peers (P2P Transactions) or peer-to-peer-merchant (P2PM) transactions between a bank and the prepaid wallet.
P2PM is a classification by NPCI for small businesses, which receive more than or equal to ₹50,000 in a month via UPI transactions.
So, if you send money to family, friends or a small business merchant’s bank account, you will not have to pay any extra fee.
What will be The Interchange Fee Amount?
The amount will vary from 0.5% to 1.1% of the money transfer.
About 0.5% will be levied on education, fuel, utility payments and agriculture.
Retail outlets and convenience stores will be charge 1.1%.
Shopkeepers that fall in the medium category will have to bear the cost if transactions a day exceed ₹2,000.
It will surely have a huge impact on merchants whose daily transactions are high.
It will help to increase the money flow for service providers.
Since the service providers have been struggling to make profits due to the low-transaction fees on UPI transactions, it will help them to increase their revenue.