![Customers will not be charged for UPI payments, and the move is expected to make payments simpler](https://kjcdn.gumlet.io/media/88462/upi1.jpg)
From April 1, 2023, an interchange fee of up to 1.1 percent will be applied to any Unified Payments Interface (UPI) transaction of more than Rs 2,000 made using prepaid payment instruments (PPIs), such as online wallets or pre-loaded gift cards, etc. The interchange charge is often applied to credit card transactions and is assessed to defray the expenses of transaction acceptance, processing, and authorization.
Although the move has been applauded by digital companies like Cashfree Payments and Spice Money, customers can have a number of questions about it.
Will customers be billed for UPI payments?
No. In a circular, the NPCI made it clear that the interchange fees established are only relevant for PPI merchant transactions and that customers are not charged. It is also further stated that there are no fees for bank account-to-bank account-based UPI payments (i.e., typical UPI payments).
So how will customers benefit from this?
Customers will be able to use any bank account, a RuPay credit card, or a prepaid wallet on UPI-enabled apps as a result of this expansion to UPI.
"The NPCI circular will introduce users to additional payment use cases, increasing the allure of wallets. Due to the exposure of card details, it will make it unnecessary for customers to carry numerous cards, minimizing fraud and theft," explained CEO and Co-Founder of Cashfree Payments, Akash Sinha.
How will businesses benefit?
For instance, at point of sale (PoS), many retailers accept customer payments via wallets. Interoperability will make collection much simpler for businesses because it will enable merchants to accept wallet payments from customers using any wallet.
Furthermore, since users can also pay via UPI or card infrastructure, it will reduce the requirement for particular connections with a particular wallet to accept payments on a website. Customers will have more payment options as a result. The development of digital payments will be accelerated by wallets' compatibility with UPI, improving the customer experience.
"It is also anticipated that the higher fees for high-value UPI transactions may encourage businesses to accept other payment methods, such as credit and debit cards, which have higher transaction costs. By doing this, the ecosystem of payments will become more diverse and less reliant on UPI for all transactions. Merchants are likely to use UPI for all transactions once a fee for high-value transactions is implemented, which will accelerate the adoption of digital payments," said Chawwla.