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ARTICLE · 23 MAY 2023

Explainer On Fees For UPI Payments Via Wallets

Ikigai Law
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NPCI recently recommended interchange fees of up to 1.1% on UPI transactions through prepaid payment instruments (PPIs). The fees are applicable on transactions above INR 2000 from 1 April 2023.

IndiaTechnology
Ikigai Law
Ikigai Law
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An explainer on the interchange fees for UPI payments through prepaid payment instruments.

NPCI recently recommended interchange fees of up to 1.1% on UPI transactions through prepaid payment instruments (PPIs). The fees are applicable on transactions above INR 2000 from 1 April 2023. PPIs include e-wallets and pre-loaded cards. Some examples of e-wallets that must be interoperable via UPI are Paytm and MobiKwik wallets.

Many took the NPCI's recommendation to mean that UPI transactions were no longer free. This understanding was partly right, but mostly wrong. First, customers will not pay to use UPI – merchants will. Second, the fee is only paid (by the merchant) when a customer uses UPI to pay through her e-wallet (like a Paytm or MobiKwik wallet). If the source of funds is the user's bank account, no one pays any fee.

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