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NPCI recommends up to 1.1% interchange fee on UPI transactions of over Rs 2,000 via PPIs  

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NPCI recommends up to 1.1% interchange fee on UPI transactions of over ₹2,000 via PPIsOn 24th March 2023, the National Payments Corporation of India (NPCI) announced that the Unified Payments Interface (UPI) transactions of above Rs 2000 made using Prepaid Payment Instruments (PPIs) such as wallets or cards will attract an interchange fee ranging from 0.5% to 1.1%.

  • The changes will come into effect from 1st April 2023.


  • The interchange fee of 1.1% will have no impact on the end-customer and UPI transactions will remain free for them.
  • At present, there are no charges on UPI transactions, although the UPI ecosystem incurs a cost of Rs 2 for every transaction of Rs 800.

Details of Interchange fee:

i.The lowest interchange fee of 0.5% would be applied to fuel payments.

ii.An interchange fee of 0.7% would be applied for transactions above Rs2,000 related to telecom, utilities, post office, education, and agriculture.

iii.The fee would be 0.9% and 1% for UPI transactions at supermarkets and for mutual funds, government, insurance and railways, respectively.

Key Points:

i.Interchange will not be applicable on Peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between bank accounts and PPI wallets.

  • However, PPI issuers will need to pay 15 bps as a “wallet loading service charge” to the remitter bank for loading over Rs 2,000 in the prepaid wallet.

ii.This interchange pricing will be reviewed by September 30, 2023

iii. NPCI also asked UPI service providers and merchants to boost interoperability by clearly and prominently displaying the UPI payment option, by September 30, 2023.

Additional info: 

The UPI platform does not charge merchant discount rate (MDR) to merchants, although it is charged for processing payments on debit and credit card transactions. The MDR is capped at 0.9% for debit cards. For using credit cards on UPI, there are no charges up to Rs 2,000.

Recent Related News:

i.NPCI has allowed UPI transactions for non-resident bank accounts like Non-Residential External (NRE) and Non- Resident Ordinary (NRO) linked to international mobile numbers.

ii.HDFC Life Insurance Company Limited (HDFC Life) has partnered with NPCI to allow policyholders to pay their premiums via “UPI 123PAY”, a unique voice-based Unified Payments Interface (UPI) service.

About National Payments Corporation of India (NPCI):

NPCI is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
– Dilip Asbe
Headquarters– Mumbai, Maharashtra
Incorporated in 2008