“Discover the reality behind charges on UPI payments. NPCI’s recent announcement clarified that direct bank-to-bank UPI transactions will remain free. However, fees may apply for prepaid instruments on merchant payments above Rs. 2000 from April 1, 2023. Stay informed about UPI changes. Source: NPCI Circular, UPI Payments, Digital Transactions, Payment Gateway Updates.”
UPI stands for Unified Payments Interface. It is a digital payment system that allows individuals to transfer money. At present there are no charges levied on transactions via UPI. The new announcement by payment gateway National Corporation of India (NPCI) has led to confusion among those who depend on Unified Payments System (UPI) for their day to day transactions.
Now, the Question arises UPI payments will now be free or chargeable. Here National Corporation of India (NCPI) cleared that the transactions that are directly from Bank Account to Bank Account will remain free. In this case, there are three ways to transfer money via Unified Payments System (UPI). By entering the VPA (Virtual Payment Address). VPA is a unique address created by your Bank for you. The VPA is used as an account specific code and acts as digital identity for UPI transactions. Second is via Account Number and last is IFSC code or QR code. This is the Traditional way of UPI by entering Account Number of person and IFSC code of bank. NPCI has declared that the basic services of UPI will continue to remain free.
A recent circular of NPCI has suggested that from April 1, 2023 UPI transactions done via Prepaid Instruments such as Wallet or Cards will attract a fee of 1.1% for certain merchant payments. These interchange fees will be levied only on merchant payments of above Rs. 2000 to certain merchant categories. However, there is no fee of UPI transaction is up to Rs. 2000.
In other words, it will apply only when a customer has wallet of one particular company and makes a payment to a merchant, who has a wallet of another company. Few examples of Wallets are Paytm Wallet, Phone Pe, Mobi Kwik Wallet and SODEXO.
However, Normal Customers has no need to worry because no such type of circular issued by NPCI for normal customers, it is only for merchants.
I hope you understand the new notification for Unified Payments Interface (UPI) charges. In case of any query, feel free to ask your questions.
Submitted by: Megha Gupta – AIR 25 – CS FOUNDATION
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there is some factual errors. would like to discuss.
in the article, is the statement … However, there is no fee of UPI transaction is up to Rs. 2000…. correct?
It means, If I am paying Rs. 3000 from my Paytm Wallet to Merchant’s Paytm Wallet It will not attract any Fee for me as well as for Merchant too.
Am I right or not?
Yes, Nor You Nor the Merchant will pay any extra charges.
By this Circular, the Merchants are charged the fee of 1.1% and not for the customers . Incase the merchants forced the customers not to make payment through UPI of more than Rs 2000 . This will make/ create diffcult/delay by customers . This decision of charging UPI transaction fee of 1.1% to Merchants above RS 2000 is Valuable?
No official statement or rule on that yet. But it is possible that merchants may charge users extra to cover up for the interchange fee.