What new UPI rules say on charges for bank-to-bank payments

National Payments Corporation of India (NPCI) has clarified that 'normal' bank-to-bank UPI payments will not be charged, contrary to what many media reports have claimed.

While many media reports claimed that UPI transactions are going to be charged from April 1 onwards, according to the clarification issued by the NPCI, a very nominal fee will be charged only on a very small subsection of UPI transactions. (File)

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National Payments Corporation of India (NPCI), the retail payments and settlement body, on Wednesday (March 29) clarified that there are no charges for bank account-to-bank account-based UPI payments, which are the “normal” UPI payments for most people.

What has changed, then?

NPCI said that an interchange charge has been introduced for PPI (prepaid payment instrument) merchant transactions — but customers will not be charged.

The clarification came after media reports suggested that NPCI has issued a circular saying that there will be an interchange fee of 1.1 per cent on UPI transactions made through PPI instruments like wallets or cards. This charge will be applicable for transactions above Rs 2,000, as per the reports.

The said circular was not publicly available.

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What are PPI transactions?

Prepaid payment instruments (PPI) include online wallets (like Paytm Wallet, Amazon Pay Wallet, PhonePe Wallet, etc.) and preloaded gift cards.

A PPI payment done via UPI refers to a transaction done via such a wallet through a UPI QR code.

What does the latest NPCI circular say?

In a statement issued on Wednesday, NPCI said that as per recent regulatory guidelines, PPI wallets have been permitted to be part of the interoperable UPI ecosystem.

“The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account-based UPI payments (i.e. normal UPI payments),” NPCI said.

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So, most UPI transactions are not affected?

Generally, the preferred method of UPI transactions is linking the bank account in any UPI-enabled app for making payments, which makes up for over 99.9 per cent of total UPI transactions.

These bank account-to-account transactions continue to remain free for customers and merchants, the statement said.

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