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NPCI clears air on UPI transaction charges, says service remains free for customers

The NCPI, in its clarification, said that the intercharge charges introduced are only applicable for Prepaid Payment Instruments (PPIs) merchant transactions and there will no charge on customers.

New Delhi: Amid the uproar over proposed 1.1% fee on Unified Payments Interface (UPI) transactions, the National Payments Corporation of India (NPCI) issued a clarification about the charges levied on such transactions.

The NCPI, in its clarification, said that the intercharge charges introduced are only applicable for Prepaid Payment Instruments (PPIs) merchant transactions and there will no charge on customers.

“There are no charges for bank account to bank account based UPI payments,” it further said.


Earlier reports said that 1.1% interchange fee was applicable on UPI transactions of Rs 2,000 and it was reportedly done with an objective to raise revenue for banks & payment service providers. As per the circular issued on March 24, the charges are set to come into effect from April 1 and will also be reviewed after 6 months.

The NPCI clarification comes amid confusion & chaos among users over who will be pay for these transactions and what payment modes will come under its purview.

PayTm Payments bank clarification

Moments ago, PayTm Payments Bank also took to Twitter and informed UPI users that the service remains free for all consumers and no interchange will be levied on customers.

In its Twitter post, it said that customers won’t have to pay extra fees on making payments to merchants via UPI.

About UPI & PPI

With the economy making a transition to digital mode, UPI & PPI have emerged as strong tools of driving bulk of cashless transactions.

UPI is currently the most used digital payment system, which allows users to do peer-to-peer (P2P) and peer-to-merchant (P2M) transaction using their mobile phones & without paying a penny for it.

The PPIs constitute the array of digital wallets that allow users to keep money in a wallet & then make payments. There are couple of PPIs with strong presence in the country, which included PayTm, Phone Pay & Google Pay.