The National Payments Corporation of India (NPCI) has notified that an interchange fee of up to 1.1% will be applicable on merchant UPI (Unified Payments Interface) transactions done using prepaid payment instruments (PPIs)–wallets or cards–with effect from April 1.
Applicable Charges
The charge will be levied on UPI payments of over ₹2,000 made to online merchants, large merchants and small offline merchants. However, on certain merchant categories, a lower interchange starting from 0.5%, might be levied as per applicable caps, NPCI said.
Exemptions
Interchange will not be applicable on P2P and P2PM transactions between bank accounts and PPI wallets. However, PPI issuers will need to pay 15 bps as a “wallet loading service charge” to the remitter bank for loading over ₹2,000 in the prepaid wallet.
Review
This interchange pricing will be reviewed by September 30, 2023, as per the NPCI circular.
Impact
The new norms are expected to increase the appeal, scope, role and usability of wallets as they can now be used to make UPI payments across QR codes and devices, increasing payments alternatives for customers 2. The inter-operability norms will enable universal acceptance of wallets across all UPI QR codes and devices. It will also ensure uniformity and parity by clearly defining the interchange fees on wallet payments as against the current practice of bilateral agreements between wallet issuers and payment platforms.
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