Fear not, UPI payment is still free

— An article by Gopi Shah

The National Payment Corporation of India (NPCI) has recommended an interchange fee on UPI
deals of over Rs 2,000 made through Prepaid Payment Instruments (PPIs). What does this mean for
consumers who are making payments through UPI? Are UPI transactions no longer free? We answer
all questions.

Busting Myths

1. General UPI payments won't be charged starting April 1, 2023
2. Only some digital wallet payments will be charged.
3. Users won’t be impacted by the change. Only some merchants will need to pay the interchange
fee.

Will UPI transactions be charged?

No. That isn’t going to be. The new rule recommended by NPCI does not change anything for general
consumers.

Who will be impacted by the new rule?

It will only impact merchants who accept payments through the PPI system. Payment of Rs 2000 and
over will only be charged.

What does PPI payment mean?

PPI payment simply means payments through digital wallets. For instance, any payment made
through Paytm or PhonePe will charge merchants some amount. NPCI is calling it an interchange fee.

What about UPI payments through a bank account?

UPI payments through bank accounts won’t be impacted and remain free.

Can merchants charge the buyers extra to cover the interchange fee?

No sanctioned statement or rule on that yet. But it’s possible that merchants may charge the buyers
extra to cover up for the interchange fee.

Now, this simply means that general users aren’t going to be impacted by this move and need to pay
a figure for UPI deals of Rs 2000 or over unless the merchants choose to charge extra from
consumers. Still, it’s possible that merchants may start charging extra from buyers in an attempt to
make up for the interchange fee. But, there’s no clarity on that bit yet. So, no hypotheticals there for
the time being.