Fees on UPI payments: Why users need not worry, Check Details

The Unified Payments Interface (UPI) network's interchange charge has just been fixed by the National Payments Corporation of India (NPCI) at 1.1% for merchant transactions started using PPIs such as mobile wallets.

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The NPCI circular states that the adjustments take effect from April 1.

What is an interchange fee

A fee paid for accepting and processing online transactions is known as an interchange fee. While transactions over Rs 2,000 are subjected to the 1.1% broad interchange, NPCI has set up various merchant charge schemes for PPI payments on UPI that vary by business.

This means that users will be charged an interchange fee of up to 1.1% on transactions above Rs 2,000 if they have money in their PhonePe Wallet, and want to pay a merchant using their UPI QR code.

This works similarly to how merchants are charged for customer credit card payments, also known as the merchant discount rate (MDR). PhonePe will be paid the appropriate interchange charge by the retailer if you pay for a PPI by UPI at a store and the QR code is that of PhonePe. This charge is not necessary for users to pay.