India’s payments network has reassured consumers that standard bank-to-bank UPI transfers will remain free, as new charges are solely targeted at merchant transactions routed through prepaid payment instruments, amid concerns over fee implementation.
India’s payments network has moved to calm confusion over new UPI charges, making clear that ordinary bank-to-bank transfers will stay free while a narrow set of merchant payments made through prepaid payment instruments will face an interchange fee. The National Payments Corporation of India said the levy applies only to merchant transactions routed through wallets and similar instruments, not to consumers sending money directly from a bank account. The clarification followed a wave of concern that all UPI payments would become chargeable from 1 April 2023. (indianexpress.com)
Under the revised framework, merchant UPI payments above ₹2,000 made via prepaid payment instruments attract a 1.1% fee. Industry reports said the charge is meant to cover the cost of accepting, processing and authorising those transactions, and the NPCI said it would review the pricing by 30 September 2023. The fee does not apply to customers using standard UPI transfers, which remain free at the point of use. (timesofindia.indiatimes.com)
The distinction matters because UPI has become the backbone of India’s digital payments system, with transaction volumes rising sharply in recent years. That scale has also increased pressure on the ecosystem to find a sustainable funding model for banks, payment apps and wallet issuers. Analysts quoted by Indian outlets said the new rule effectively shifts the cost burden to merchants and prepaid instrument providers, while leaving everyday consumers untouched. (timesofindia.indiatimes.com)
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