After the NPCI guidelines on wallet interoperability and interchange fees, certain social media users are claiming that with this move UPI payments will not be free. These claims are completely false.
A clarification has also been issued by National Payments Corporation of India (NPCI) in this regard. NPCI has stated that “UPI is free, fast, secure and seamless” and that interchange fees of 1.1% are applicable only for merchant transactions, which will not be borne by the consumer.
Leading player in UPI, Paytm Payments Bank has also issued a statement on the same. The Bank has said that “no customer will pay any charges on making payments from #UPI either from a bank account or PPI/Paytm Wallet”.
With the recent guidelines on interoperability for prepaid instruments (PPI) like wallets, users will be able to pay using mobile wallets to any UPI QR code, even those issued by other companies, across offline and online merchants. The interchange fees on transactions above ₹2,000 will be paid by the issuer of PPI and not by the consumers. Furthermore, interchange fees shall not be applicable on peer-to-peer (P2P) payments and small businesses in the P2M category.
As the Prepaid Payment Instrument (PPI) issuer, Paytm Payments Bank will pay a small fee of 15 bps to remitter banks for a transaction value greater than ₹2,000 when users add money to their Paytm Wallet. Paytm Bank is the largest issuer of KYC wallets (prepaid instruments) with over 100 million users. In turn, it will earn 1.1% interchange revenue when Paytm Wallet customers (i.e., the KYC wallets issued by Paytm Payments Bank) make payment on merchants acquired by other payment aggregators or banks.
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