A recent circular issued by the National Payments Corporation of India (NPCI) has suggested that Prepaid Payment Instrument (PPI) charges be applied from April 1 for merchant transactions made using the Unified Payments Interface (UPI).
NPCI, UPI's governing body, will review the stated pricing on or before September 30, 2023.
According to the NPCI circular, using PPIs on UPI will attract interchange at 1.1 percent of the transaction value for transactions worth over Rs 2,000.
Once the additional charges come into effect, the PPI issuer will be paying around 15 basis points as a wallet-loading service charge to the remitter bank. No interchange in terms of peer-to-peer (P2P) or peer-to-peer-merchant (P2PM) transactions between the bank account and the PPI wallet will apply.
A CNBC-TV18 report quoted broking firm Equirus as saying that “this could be the first step; we may incrementally see interchanges being announced on other modes of payments as well”.
The broking firm further said that nearly 65-70 percent of P2PM UPI transactions are worth more than Rs 2,000. “...there is adequate possibility for various stakeholders in the system. So, this should be seen positively for credit card companies as the risk of any cap on MDR actually reduces”.