Gpay, Paytm, other users need not worry about new surcharge; Know reason



The regulator of Unified Payments Interface (UPI), the National Payments Corporation of India (NPCI) has recently introduced a surcharge in digital payments made through prepaid payment instrument (PPI) such as mobile wallets.

According to NPCI, payments above <span class=
According to NPCI, payments above 2,000 made using UPI network will bear a surcharge or interchange fee of up to 1.1%.(Shutterstock)

According to NPCI, payments above 2,000 made using UPI network will bear a surcharge or interchange fee of up to 1.1% if it is done from a PPI platform, such as Paytm Wallet, Phone Pe. It has recently clarified that the bank account-to-bank account payments (normal transactions) made using UPI won’t attract any charge. It will be paid by merchants and not by customers.

Also read: Paytm answers if customers need to pay fee on UPI payments after NPCI’s latest circular

“We have an important announcement. Paytm UPI is free, fast, secure, and seamless. No customer will pay any charges on making payments from UPI either from bank account or PPI/Paytm Wallet. Please read the @NPCI_NPCI press release on the issue for more clarity,” Paytm Payments Bank said in a tweet.

What is PPI?

PPI is an instrument which works as a digital wallet where you could load money and use it for different transaction. There are different players in the market that provide a dedicated wallet for customers such as Amazon Pay, Paytm Wallet and Phone Pe. Here, the money is not saved in bank, rather stored in a separate digital entity. PPI merchant transaction means, payment made through wallet.

Payments to a merchant, such as a shop owner, can be made through UPI network channels from a specific PPI and the money will be deducted that was stored in it, and not from the bank.

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What is interchange pay?

The interchange fee is usually levied to cover the cost of accepting, processing and authorising the transaction. There is different interchange fee for different merchants such as the fee is lower in the category of agriculture and telecom sector merchants.

Who will have to pay the surcharge?

When a customer will make a payment using PPI wallet to a merchant, the applicable surcharge will be levied from the merchant and not from the customer.

What does NPCI notice say?

According to the circular issued by the regulatory body, payments of 2,000 and above made through PPIs using UPI network to a merchant will be charged upto 1.1% interchange fee from April 1. Few merchants such as fuel service stations will be eligible for lower interchange fees on UPI payments to 0.5%. The pricing will be reviewed by NPCI on September 30.

In its clarification, NPCI said the surcharge will be charge only on PPI merchant transactions and not on the ‘normal’ way of bank-to-bank UPI transactions.

“Traditionally, the most preferred method of UPI transactions is linking the bank account in any UPI enabled app for makin payments which contributes over 99.9% of total UPI transactions. These account-to-account transactions continue to remain free for customers and merchants,” it said in a circular.

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