No customer will pay any charges on UPI payments, clarifies NPCI

The regulator of Unified Payments Interface (UPI), the National Payments Corporation of India (NPCI) has recently announced an interchange fee over payments made through UPI in PPI merchant transactions.

According to the circular released by NPCI, merchant payments over Rs 2,000 made through  Unified Payments Interface (UPI) done through Prepaid Payment Instruments (PPI) will bear a surcharge or interchange fee of up to 1.1% from April 1.

NPCI has clarified that customers will not need to pay any charges for the payments made through UPI.

Moreover, Paytm has also clarified that customers don’t need to pay any surcharge if the UPI transaction is a bank account-to-bank account payments (normal transactions). The new interchange fee will be applied on the merchant rather than the customer.

Paytm took to Twitter to clarify the confusion of users and shared a screenshot of the press release of the NPCI and wrote a tweet that said, “We have an important announcement. Paytm UPI is free, fast, secure, and seamless. No customer will pay any charges on making payments from UPI either from bank account or PPI/Paytm Wallet. Please read the @NPCI_NPCI press release on the issue for more clarity.”

That means when a customer will make a payment using PPI wallet to a merchant, the applicable surcharge will be imposed on the merchant and not on the customer.

Here is the Tweet

We have an important announcement. Paytm UPI is free, fast, secure, and seamless. No customer will pay any charges on making payments from UPI either from bank account or PPI/Paytm Wallet. Please read the @NPCI_NPCI press release on the issue for more clarity. https://t.co/9dF0jlqmoh

— Paytm Payments Bank (@PaytmBank) March 29, 2023

Interchange fee

The interchange fee is typically associated with card payments, levied to cover to cover the costs of accepting, processing, and authorising the transactions. There is different interchange fee for different merchants such as the fee is lower in the category of agriculture and telecom sector merchants.

NPCI notice

According to the circular issued by the regulatory body, UPI merchant transaction of over Rs 2,000 made via PPI will be charged with interchange fee of 1.1 per cent starting April 1, 2023. Few merchants such as fuel service stations will be eligible for lower interchange fees on UPI payments to 0.5%. The pricing will be reviewed by NPCI on September 30.

In its clarification notice, NPCI said the surcharge will be charge only on PPI merchant transactions and not on the ‘normal’ way of bank-to-bank UPI transactions.

NPCI has also revealed that everyday over 8billion UPI transactions are being process for free for merchants and customers.