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UPI Transaction to Remain Free, Wallet Payments May Incur Transaction Charge

The National Payments Corporation of India (NPCI) issued a clarification on Wednesday regarding the recently introduced interchange charges, stating that the charges do not apply to customers but only to prepaid payment instruments (PPI) transactions. It also stated that there will be no fees for bank account to bank account UPI payments – standard UPI payments.

According to the NPCI, using prepaid payment instruments (PPIs) – such as gift cards and wallets – for UPI transactions will incur an interchange fee of up to 1.1% beginning April 1.

The charges will be levied if the transaction is more than Rs 2,000, it said.

According to NPCI, over eight billion transactions are processed for free for customers and merchants each month. By providing a free, fast, secure, and seamless experience, UPI has emerged as a preferred mode of digital payment.

The National Payments Corporation of India created UPI, an instant payment system (NPCI). It integrates multiple bank accounts into a single mobile app, combining several banking features and enabling seamless merchant payments.

Linking the bank account in any UPI-enabled app for making payments has traditionally been the most preferred method of UPI transactions, accounting for about 99.9% of total UPI transactions. Customers and merchants continue to benefit from free bank account-to-account transactions.

“Recent regulatory guidelines, the Prepaid Payment Instruments (PPI Wallets) have been permitted to be part of interoperable UPI ecosystem. In view of this NPCI has now permitted the PPI wallets to be part of interoperable UPI ecosystem. 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),” ANI quoted NPCI as saying on Wednesday.

The National Payments Corporation of India (NPCI) was started in 2008 as as an umbrella organization for retail payment and settlement systems in India.

NPCI is committed to bringing innovations in retail payment systems through the use of technology and to transforming India into a digital economy.

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