Discover the latest on UPI transactions: UPI is free, fast, secure, and seamless. NPCI clarifies new rules—charges only on PPI merchant transactions, not for normal UPI payments. Understand the distinction and make informed digital payment choices.
UPI, which stands for Unified Payments Interface, is a digital payment system that allows individuals to transfer money instantly from one bank account to another in India. UPI has become increasingly popular due to its many benefits, including being free, fast, secure, and seamless.
The Reserve Bank of India (RBI) has introduced new rules regarding the charges applicable to transactions made through the Unified Payments Interface (UPI) system. According to the new rules, UPI transactions over Rs. 2,000 made through a prepaid payment instrument (PPI) will attract PPI merchant charges. The interchange charges for prepaid payment instrument (PPI) merchant transactions, which are transactions where a customer uses a prepaid payment instrument such as a prepaid card or digital wallet to make a payment to a merchant.
“It is important to note that these interchange charges are only applicable for PPI merchant transactions and not for normal UPI payments.”
A. Normal UPI payments are bank account to bank account transfers made through the Unified Payments Interface (UPI) system, where there is no involvement of any prepaid payment instrument.
In other words, if a customer uses UPI to transfer money from their bank account to another bank account, there are no charges for the customer or the banks involved in the transaction.
However, if a customer uses a prepaid payment instrument to make a payment to a merchant, then the acquiring bank will have to pay an interchange fee to the issuing bank.
B. Prepaid Payment Instrument (PPI) merchant transactions are those where a customer uses a prepaid payment instrument such as a prepaid card or digital wallet to make a payment to a merchant. Here are some examples of PPI merchant transactions:
1. Online shopping: A customer uses a prepaid card or digital wallet to pay for goods or services purchased from an online merchant.
2. Bill payments: A customer uses a prepaid card or digital wallet to pay bills for utilities such as electricity, water, and gas.
3. Public transportation: Many public transportation systems now accept prepaid cards or digital wallets as a payment method for bus, train, or subway fares.
4. Food and beverage purchases: A customer can use a prepaid card or digital wallet to pay for food and drinks at restaurants, cafes, or food trucks.
5. Retail purchases: A customer can use a prepaid card or digital wallet to pay for products at retail stores such as supermarkets, pharmacies, or convenience stores.
6. Ticket purchases: A customer can use a prepaid card or digital wallet to purchase tickets for events such as concerts, movies, or sporting events.
7. Travel-related expenses: A customer can use a prepaid card or digital wallet to pay for travel-related expenses such as hotel stays, flights, car rentals, or vacation packages.
This distinction between PPI merchant transactions and normal UPI payments is important because it ensures that customers who use UPI for bank account to bank account transfers are not charged any fees, which promotes the adoption and usage of digital payment systems in India.
RELEVANT PRESS RELEASE FROM National Payments Corporation of India IS AS FOLLOWS:-
National Payments Corporation of India
UPI is free, fast, secure and seamless
Every month, over 8 billion transactions are processed free for customers and merchants
using bank-accounts
Mumbai – 29th March 2023: In the recent times, UPI has emerged as preferred mode of digital payment by offering free, fast, secure and seamless experience. Traditionally, the most preferred method of UPI transactions is linking the Bank account in any UPI enabled app for making payments which contributes over 99.9% of total UPI transactions. These Bank account-to-account transactions continue to remain free for Customers and Merchants.
Recent regulatory guidelines, the Prepaid Payment Instruments (PPI Wallets) have been permitted to be part of interoperable UPI ecosystem. In view of this NPCI has now permitted the PPI wallets to be part of interoperable UPI ecosystem. The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account based UPI payments (i.e. normal UPI payments).
With this addition to UPI, the Customers will have the choice of using any bank accounts, RuPay Credit card and prepaid wallets on UPI enabled apps.
About NPCI:
National Payments Corporation of India (NPCI) was incorporated in 2008 as an umbrella organization for operating retail payments and settlement systems in India. NPCI has created a robust payment and settlement infrastructure in the country. It has changed the way payments are made in India through a bouquet of retail payment products such as RuPay card, Immediate Payment Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC FasTag) and Bharat BillPay.
NPCI is focused on bringing innovations in the retail payment systems through the use of technology and is relentlessly working to transform India into a digital economy. It is facilitating secure payment solutions with nationwide accessibility at minimal cost in furtherance of India’s aspiration to be a fully digital society.
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