The National Payments Corporation of India (NPCI) has issued a circular in which it suggested “Prepaid Payment Instruments (PPI)” fees on merchant transactions on Unified Payments Interface (UPI).
RBI as per the guidelines provided under the Payment and Settlement Act, 2005 defined Prepaid Payment Instruments (PPIs) as instruments of payment that facilitate buying of goods and services against the value stored within or on the instrument.
The value stored in the instrument is represented by the value that has already been paid for by the holder or the instrument by any method such as, by cash, by debit from a bank account, credit card or even from other PPIs.
PPIs can come in the form of payment wallets, smart cards, magnetic chips, vouchers, mobile wallets etc.
The governing body of the UPI payment system added that the PPI fees would be levied on transactions above 2,000 on UPI.
It will result in an interchange at 1.1% of the transaction value.
However, the NPCI has clairified that there will be zero charges for the bank account to bank account-based UPI payments or normal UPI payments.
The issuer of prepaid instruments will also be required to pay 15 basis points of the fee to the remitter bank for loading a transaction value above 2,000, the circular said.