NPCI clarifies who will pay fees on UPI wallet transactions from April 1

In a statement issued on Wednesday, NPCI said that as per recent regulatory guidelines, PPI wallets have been permitted to be part of the interoperable UPI ecosystem.

As per the circular issued on March 24, the changes of the 1.1% fee on UPI wallet transactions above Rs 2,000 will come into effect from April 1, 2023, and the above pricing will be reviewed on or before September 30, 2023. Many users are confused about the NPCI’s above statement, worrying that they will have to bear the brunt of the interchange fee.

NPCI on Wednesday (March 29, 2023) clarified that the interchange fee of 1.1% will be levied on specified categories of merchants including online merchants, large merchants, and small merchants for transactions of over Rs 2,000 from April 1.

The retail payments and settlement body, also clarified that there will be no charges for the bank account to bank account-based UPI payments — normal UPI payments. “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),” it said.

There will be an interchange fee of 1.1 per cent on UPI transactions made through PPI instruments like wallets or cards. Wallets, smart cards, vouchers, magnetised chips come under prepaid payment instruments. Paytm wallet, PhonePe wallet, Amazon Pay, and SODEXO vouchers are some examples of this. Essentially, this fee will only apply to digital wallet transactions made via merchant QR codes, which are likely to be paid by the merchant acquirer to the wallet issuer. Therefore, neither the merchant nor the customer is directly impacted by the interchange fee.

These bank account-to-account transactions continue to remain free for customers and merchants, the statement said.

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