The National Payments Corporation of India (NPCI) has announced an interchange fee on Unified Payments Interface (UPI) transactions above Rs 2,000 made via prepaid payment instruments (PPIs) such as online wallets, gift cards, and more. The interchange fee, which ranges from 0.5-1.1%, aims to cover the costs of accepting, processing, and authorizing transactions. The lowest fee of 0.5% will be applied to fuel payments, while transactions exceeding Rs 2,000 for telecom, utilities, post office, education, agriculture, etc., will attract a 0.7% fee. The interchange fee for UPI transactions at supermarkets, mutual funds, government, insurance, and railways could be between 0.9% and 1%. However, the fee will not apply to peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between bank accounts and PPIs. The NPCI aims to raise revenue for banks and payment service providers who have reportedly been struggling with the high cost of UPI transactions. The interchange fee will be charged from April 1, 2023, and reviewed up to September 30, 2023.
