UNIFIED PAYMENTS INTERFACE (UPI) AND PREPAID PAYMENT INSTRUMENTS (PPI) AN INTRODUCTION
UNIFIED PAYMENTS INTERFACE is known as UPI. A real-time payment system makes interbank transactions easier by instantaneously moving money between two bank accounts using a mobile device or online banking platform. User-friendly transactions, account balance checks, and payment processing are all made possible by UPI, which enables users to link various bank accounts to a single mobile application. Due to its simplicity of use, ability to send funds instantly, and availability around-the-clock, UPI has grown in popularity in India.
Mobile/payment wallets (like Paytm Wallet, Amazon Pay Wallet, and PhonePe Wallet), smart cards, stripe cards, paper coupons, etc. are examples of PREPAID PAYMENT INSTRUMENTS (PPI). A person can send and get money-using PPI without physically exchanging cash or credit cards.
These days, we use online payment methods rather regularly. Small vendors as well as gas stations, malls, and online retailers all accept payments through this method.
This shift occurred when Our Honorable Prime Minister addressed the country on the eve of November 7, 2016, and said that the 500 and 1000 will no longer be legal cash as of November 8.
Demonetisation caused problems and difficulties for the public, and in order to avoid these issues and difficulties, people began using online transactions for everyday spending. As a result, both the number and value of online purchases surged later that day. There are numerous apps in market providing these kind of services.
The National Payments Corporation of India (NPCI), the country’s ruling body for retail payment systems, oversees Unified Payments Interface (UPI) transactions in India. The Reserve Bank of India (RBI) and the Indian Banks’ Association support the NPCI, a non-profit organisation that was established in 2008. UPI, RuPay card, Instant Payment Service (IMPS), and Bharat Bill Payment System (BBPS), among others, are just a few of the retail payment systems it manages.
Several regulatory organisations, in addition to the RBI, may play a part in the UPI ecosystem. For instance, the Ministry of Electronics and Information Technology (MeitY) is in charge of ensuring the security and privacy of UPI transactions, while the Telecom Regulatory Authority of India (TRAI) supervises the usage of mobile numbers for UPI transactions.
To maintain the efficiency, safety, and security of digital payments in India, a variety of rules and standards are applied to the UPI system.
IS UPI CHARGEABLE OR NOT
Let me explain this to you, Users of UPI are not charged any fees or charges for personal (P2P) or merchant (P2M) transactions. Nothing will change for you about UPI Payments, and there will not be any fees associated with UPI Bank Transfers. The updated suggestion only applies to wallets and PPI.
There are instances where UPI transactions made using prepaid payment methods (such wallets and credit cards) will attract transaction fees. Only on transactions above 2,000 that are made to both online and offline businesses will it have an interchange fee of 1.1%.
Therefore, users are not required to pay anything; you may use your debit or credit card as usual. You can also consult the NPCI’s official circular. The Interchange, as previously stated, is only relevant when you make payments using wallets (Paytm, PhonePe), and even then, you are not charged. It states unequivocally that for sums exceeding 2,000, Unified Payments Interface (UPI) utilising Prepaid Payment Instrumentation (PPI) would be subject to charges of 1.1% on the transaction amount. How will wallets integrate with UPI now? NPCI has launched Wallet Interoperability with UPI, which you may have overlooked. In other words, you may use your Paytm, Amazon Pay, PhonePe, etc. wallet balance (not a bank account) to make UPI payments.
As most users use UPI with bank accounts rather than wallets, there is no possibility of transaction fees. Only wallet providers may charge fees for adding money to the wallet or withdrawing money from the wallet to a bank account. These charges may vary from provider to provider and may be subject to change. It is important to check with your wallet provider for details on any charges or fees associated with UPI transactions or wallet services.
As our government clarify that the UPI transactions are meant for public good and they are in process to promote online transactions so they are not charging any transaction fees for P2P and P2M transaction in any near future.