Unified Payments Interface transactions made via prepaid instruments—such as wallets or cards—will carry an interchange fee of 1.1% for payments made to merchants.
The 1.1% interchange fee will be levied on transactions above Rs 2,000 made to online merchants, large merchants, and small offline merchants, , according to a circular from the National Payments Corporation of India, UPI's governing body. The issuer of prepaid instruments will also be required to pay 15 basis points of the fee to the remitter bank for loading a transaction value above Rs 2,000, the circular said.
The interchange fee is typically associated with card payments and is levied to cover the costs of accepting, processing, and authorising transactions.
The fee will not be applicable to person-to-person transactions or person-to-merchant transactions between a bank and the prepaid wallet.
While the 1.1% interchange fee is a broad levy, certain types of merchants will also be eligible for a lower interchange levy. For instance, payments made to fuel service stations via UPI using a prepaid instrument will only carry an interchange of 0.5%.
The pricing will come into effect starting April 1, 2023. NPCI will review the stated pricing on or before Sept. 30, 2023, the circular said.
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