Explained | Will consumers now have to pay for transactions made …

The story so far: Earlier last week, the National Payments Corporation of India (NPCI), which governs UPI, in a circular issued directly to banks, intimated that they can now levy charges on merchant transactions made through Prepaid Instrument wallets using UPI. After the information was leaked to the media, the NPCI issued a clarification stating that normal bank-to-bank UPI transactions will not be charged and that customers will not have to pay for transactions made via PPI on UPI. It said that the new interchange charges are only applicable for Prepaid Payment Instruments’ (PPI) merchant transactions.

The interchange fee, generally associated with card payments to cover the transaction cost, has now brought PPI wallets also under its fold.

What are PPIs?

Prepaid Payment Instruments (PPIs) are payment methods that can be used to purchase goods and services and send/receive money by using the stored value in the wallet. Users have to pre-load the wallet with a desired amount. The amount can be loaded/reloaded against cash or through debit to bank account, or by using credit/debit cards, UPI, or any other approved payment method in India.

PPIs can only be used in Indian rupees. PPIs can be in the form of mobile wallets, physical smart cards, secure tokens, vouchers, or any other method that allows access to prepaid funds.

What is PPI interoperability?

Previously, to use PPI at any merchant, it was necessary that the concerned merchant was engaged directly by the specific PPI issuer (specific network). All PPIs with which the merchant did not have a direct tie-up would get rejected.

The most prevalent form of PPI used in the country is the mobile wallet, and this restriction meant that customers of one specific mobile wallet could spend the money in the wallet only at specific merchant locations which were directly tied up with the same PPI wallet provider. For example, if you had a Paytm or Mobikwik wallet, you could only use it at merchants that accepted Paytm or Mobikwik QR codes. To overcome this limitation of PPIs, the RBI has mandated interoperability among different PPI issuers.

Subsequently, PPI issuers tied-up with NPCI for issuing (a) interoperable RuPay PPI cards or (b) creating interoperable wallets on UPI rails. Prepaid instruments in the form of wallets can now be linked to UPI, thus creating interoperable wallets on UPI rails.

How does PPI interoperability through UPI work?

After linking one’s PPI wallet to UPI, customers can transact using Scan and Pay on all UPI interoperable QR codes. This will enable the use of PPI wallets at all merchant locations.

The user can also send/receive money to any other wallet user. Similarly, a merchant with any UPI QR code can now accept payments from any PPI issuer or mobile wallet. PPI on UPI will speed up the growth of merchant transactions in rural areas and further deepen digital financial inclusion by catering to use cases such as healthcare, transit, education, utility bills, etc.

Do merchants have to pay for accepting wallet transaction on UPI?

The PPI enabled merchants were already paying charges to the PPI issuer for acceptance of mobile wallets or prepaid cards.

Now the charges are aligned at a network level with some standardisation. However, each merchant can work with their preferred acquiring entity. Now, for using prepaid payment instruments (PPIs) such as gift cards, wallets etc for transactions on UPI, an interchange fee of up to 1.1% has been levied from April 1, 2023.

The charges are applicable if the transaction is more than INR2,000. If you are a merchant and accepting UPI payments from a customer’s bank account, then there are no charges applicable. Charges are applicable only if you have accepted or consented for the transactions made using PPI Wallet.

Are there any charges to be paid by consumers holding wallets for PPI on UPI transactions?

Officially there are no charges to be paid by the customer.

However, merchants may pass on the additional burden to customers by way of price increase or some other means.

COMMents

SHARE

  • Copy link
  • Email
  • Facebook
  • Twitter
  • Telegram
  • LinkedIn
  • WhatsApp
  • Reddit

moonpig listed on couponmatrix.ukbarcelo-hotels-and-resorts listed on couponmatrix.ukee-home-broadband listed on couponmatrix.ukthe-fragrance-shop listed on couponmatrix.ukthe-watch-hut listed on couponmatrix.ukwindscribe listed on couponmatrix.uk
moonpig listed on couponmatrix.ukSince it started selling cards in 2000, Moonpig has firmly established itself as the go-to gifting website for all special occasions. From Valentine’s Day to Mother’s Day, you’ll find the perfect customised cards, flowers or gifts for your special person! And with plenty of Moonpig voucher codes and free delivery deals to choose from, Groupon makes it even easier to save more on your order when you head to the checkout.
barcelo-hotels-and-resorts listed on couponmatrix.ukBook your next boutique hotel stay with Barceló and unlock the door to stylish accommodation and an elegant experience you’ll want to write home about. Use our Barcelo discount code to cut the cost of your booking and you could enjoy top-quality service without the high-end price-tag. With more than 240 hotels to choose from in 22 different countries around the world, you’ll be spoiled for choice of unique accommodation. Find your perfect match today.
ee-home-broadband listed on couponmatrix.ukGet connected for less with EE Home Broadband. Discover flexible plans, unbeatable coverage and top notch customer service—it's all part of the EE package! Our EE Home Broadband deals make it easy to save on this award-winning network. Sign up to unlock loads of great perks, like free antivirus software, mobile upgrades and more!
the-fragrance-shop listed on couponmatrix.ukThe Fragrance Shop are the UK’s largest independent fragrance retailer and give their customers the option of shopping online at their own convenience or making the most of their friendly and knowledgeable staff in one of over 200 UK stores. With The Fragrance Shop discount code to hand you can discover over 130 brands fragrances for less. With so much choice, you will likely find your favourite scent or something new! From CHANEL, Burberry and Ghost to Gucci, Hugo Boss and many more - whether its a perfume, eau de toilette or aftershave - The Fragrance Shop has you covered!
the-watch-hut listed on couponmatrix.ukIf you're a bit of a stickler for a great looking timepiece then why not keep your eye on the time and bag yourself a luxury watch from The Watch Hut. All tastes are catered for and, with a wide selection of brands to choose from for men and women, including Michael Kors, Casio, Seiko and DKNY, why not use The Watch Hut discount code and get one as a gift for a loved one or a treat for yourself.
windscribe listed on couponmatrix.ukNavigating the internet can be a minefield. With Windscribe, it’s easy to stay safe and enjoy unlimited access. Windscribe works hard to keep your personal details under lock and key, away from prying eyes of advertisement companies, hackers and ISPs. It encrypts your browsing history and prevents private information, like passwords and credit card details, from being accessed. With a Windscribe voucher from us, you can save on your subscription and enjoy the peace of mind that you’re safe on the web.