'From April If you pay by UPI Transaction, then this much amount will be deducted from your pocket...', you might have received this kind of news on WhatsApp as well. You must have come to know on WhatsApp that some rules related to UPI are going to change from the 1st of April. The National Payments Corporation of India (NPCI) has notified that from April 1, 2023, interchange fees will also be imposed along with UPI payments. 1.1 per cent of the transaction will have to be paid as fees.

Here it has been kept in mind that this fee should not be included in very small transactions. That's why a limit of Rs 2000 has been kept. Different types of comments are also coming on social media regarding this. People are trying to understand this, raising the issue of inflation and some are trying to explain the move.

We spoke to CA Swaraj Jain about this. He not only explained to us in detail about UPI transactions but also explained the merchant fees.

Will users' money be deducted?

The answer is no. This money will not be deducted from the users but from the merchant. The merchant who is selling his goods after a transaction of more than Rs 2000 will have to pay the extra charge. This fee will go to NPCI. One thing to be understood here is that there is no fee for normal bank-to-bank UPI transactions. Deducted only on transfer from Wallet to Bank or vice-versa. Its real impact will be on prepaid payment instruments like the UPI wallet.

Why did NPCI reply?

When the talk about this started, there were various reports regarding UPI transactions. It was believed that now users will have to pay extra money. This is the reason that NPCI clarified the matter and explained it by tweeting. In the statement issued by NCPI, it was told that UPI is a fast, free and secure method. Whatever the charge, it will not be imposed on bank-to-bank transactions.

Why is this charge imposed?

Interchange fees are linked to card payments. The charges for transaction acceptance, processing and authorization are covered through this fee. It is not that this interchange fee will be kept the same in all fields. In some fields, it has also been kept low. This fee has been kept from 0.5 percent to 1.1 percent. 0.5 percent fee will be charged for some payments like fuel service, 0.7 percent for payment of telecom services, 0.7 percent for utilities and post office, education, agriculture etc.

If you have paid in supermarkets etc., then a 0.9 percent charge will be levied for that. Yes, 1% and 1.1% will be charged for mutual funds, government work, insurance, railways and such big things.

This interchange price will be evaluated by NPCI before 30 September 2023.

What if an additional charge is applicable?

The PPI issuing authority will have to pay the fee for loading the remitter's bank wallet when the additional charge is levied with every payment. This fee will be up to 15 basis points. Basis points represent standard finance interest rates. One basis means 1/100th of 1 percent, i.e. 0.01 percent.

Will there be a charge for transferring money to each other?

The answer is no. This fee will not be levied on Peer to Peer (P2P) and Peer to Merchant (P2PM) transactions. This means that if you want to transfer Rs 25,000 in one go, then you will not have to pay any amount. Similarly, if you make a big payment like 25000 to a merchant through UPI, then you will not have to pay the charge for that also, but in this transaction, the merchant may have to pay the charge.

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