The National Payments Corporation of India (NPCI) has reportedly made a major decision that could impact consumers who make payments via prepaid payment instruments (PPI), such as mobile wallets like Google Pay, PayTM, and other such apps. From April 1, the NPCI has set an interchange fee at 1.1% for merchant transactions initiated on the Unified Payments Interface (UPI) network. This means that users who make payments to merchants on the UPI network via wallets will have to pay extra fees.
Understanding the NPCI Circular
The NPCI issued a circular on March 24, announcing the new changes. As per the circular, the 1.1% surcharge will apply to transactions above Rs 2,000 in value. The NPCI, the governing body that oversees digital payments in India, has also set different merchant fee structures for PPI payments on UPI according to different industries. The circular cited by Economic Times reads, “Interchange shall not apply to P2P (peer-to-peer) and P2M (peer-to-merchant) transactions between bank account and the PPI wallet.” However, the circular has not yet been disclosed in the public domain.
Impact of the Changes
The changes will be applicable if users use UPI to load their wallets for amounts above Rs 2,000. According to the NPCI directive, the issuer of PPI will have to pay 15 bps (basis points) as a wallet-loading service charge to the account holder’s bank for transactions above Rs 2,000. These changes could potentially impact the number of transactions made via mobile wallets as users may now have to pay extra fees for making payments.
What Consumers Need to Know
With these new changes, consumers need to be aware of the impact they will have on their digital payments. Here are a few key points to keep in mind:
1.1% Surcharge on Transactions over Rs 2,000
Users making payments to merchants on the UPI network via wallets will now have to pay an extra fee of 1.1% on transactions over Rs 2,000 in value.
Different Fee Structures for Different Industries
The NPCI has set different merchant fee structures for PPI payments on UPI according to different industries.
Wallet-Loading Service Charge
Issuers of PPI will now have to pay a wallet-loading service charge of 15 bps for transactions above Rs 2,000.
Conclusion
The NPCI’s decision to set an interchange fee at 1.1% for merchant transactions initiated on the UPI network could potentially impact the usage of mobile wallets for making payments. Consumers need to be aware of the changes and the impact they will have on their digital payments. The NPCI’s move is aimed at reducing the dependency on cash transactions and promoting digital payments, but users may need to adjust to the new charges before continuing to use mobile wallets for making payments.
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The Chenab Times News Desk