If you use PPI and make unified payment interface (UPI) transactions over Rs 2,000, you will be required to pay 1.1% fees starting on April 1.
Your small ticket purchases or private money transfers made through UPI are not subject to fees because they are considered P2M and P2P transactions, which are exempt.
In a recent circular, NPCI stated that payments made to all online merchants, larger merchants, and small offline merchants with transaction values/amounts greater than Rs 2,000 would be subject to exchange at the rate of 1.1% of the transaction value (using prepaid payment instruments, or PPI)
For wallet loading transactions worth more over Rs 2,000, the PPI issuer must pay the remitter bank 15bps as a service fee.
However, there won’t be an interchange fee for Peer-to-peer and peer-to-peer-merchant (P2PM) transactions between a bank account and PPI wallet.
Likewise Credit cards, the customers may or may not be charged for the transactions; wither way, the costs associated with the transactions will be split amount the various payment players.
Because providing the services for free would have had negative financial effects, payment providers have been anxiously awaiting these funds.
The charges would ultimately be passed on to customers in some way or another, according to an industry expert who declined to be named.
On the other side, retailers with ticket items over Rs 2,000 will not be delighted.
The accusations against UPI follow a protracted dispute between the Indian government and the Reserve Bank of India last year.
The finance ministry quickly released a clarification stating there was no such intention in response to the RBI’s discussion paper asking for feedback on imposing fees for payment instruments.
Analyst estimate that 65 to 70 percent of transactions are P2PM, which is now excluded from the fees. For the remaining transactions, this create a potential revenue stream for a variety of payment players.
