The National Payments Corporation of India (NPCI) has now allowed prepaid payment instruments (PPI) wallets to be part of the interoperable UPI ecosystem and imposed a 1.1% penalty on UPI transactions over Rs 2,000 when using PPI.
By providing a free, quick, safe, and seamless experience, the unified payment interface (UPI) has emerged as the preferred means of digital payment. According to the report, the most favoured way of UPI transactions is to link the bank account in any UPI-enabled app for making payments, which accounts for more than 99.9% of total UPI transactions.
Nevertheless, UPI may now be used to transfer money from pre-paid wallets such as Paytm, Amazon Pay, Mobikwik, and other prepaid wallets to UPI receivers through QR code or UPI handle.
The National Payments Corporation of India (NPCI) has now allowed prepaid payment instruments (PPI) wallets to be part of the interoperable UPI ecosystem and imposed a 1.1% fee on UPI transactions exceeding Rs 2,000 when using PPI.
The interchange costs established are only relevant to PPI merchant transactions, and there is no price to consumers; also, there are no charges for bank account to bank account-based UPI payments (i.e. normal UPI payments).
Here’s all you need to know about the most recent UPI adjustments.
Who will gain from this?
People who load money into prepaid wallets but do not wish to link their bank accounts to UPI can make payments using wallets without linking their bank accounts to UPI. Businesses can now accept UPI payments from these users.
Is there a new charge?
Nothing changes for people who use bank accounts to make UPI payments. The merchant would pay a 1% charge on the new service (wallet on UPI) for transactions above Rs 2000.
Is there a cost for using a wallet?
Payments will not be charged to wallet users. There will be no charge for loading money into wallets via UPI as long as the amount is less than Rs 2000, regardless of how many times the user loads money. There will be a 0.15% tax for loadings exceeding Rs 2000, which comes out to Rs 3 on Rs 2000.
Isn’t UPI meant to be free?
The government has ordered that UPI be free for the core function of account-to-account transfer. There will be a cost if retailers utilise UPI infrastructure to accept other instruments (prepaid cards or credit cards).