Digital Payments will get expensive
UPI Payments of around 20,000 Crore are done every day in India. According to the Ministry of electronics and IT, about 2050 Lakh Crores worth of transactions are made in the Financial Year of 2022. Coming to numbers, about 8,840 crore transactions were carried out just in the last financial year.
The above data very well establish the fact that digital payments or online transactions have become really very important to India and its economy. It will be very difficult for India to survive without e-money.
Amidst all this, the National Payments Corporation of India (NCPI), UPI’s governing body has issued a circular. The circular says that a 1.1% interchange fee will be levied on transactions above Rs 2,000 made to online merchants, large merchants, and small offline merchants.
The pricing will come into effect starting April 1, 2023. NPCI will review the stated pricing on or before Sept. 30, 2023, the circular said.
The interchange fee is generally linked with plastic card payments. It is imposed to cover the expense of accepting, processing, and authorizing the transaction.
The fee will not be applicable to person-to-person transactions or person-to-merchant transactions between a bank and the prepaid wallet.
It is to note that, the 1.1% interchange fee is just a broad imposition. Some kinds of traders will also be allowed to pay for a lower interchange rate.
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This is to keep in mind that this interchange rate will only be imposed on transactions above Rs. 2000. Payments made to fuel service stations via UPI using a prepaid instrument will only carry an interchange of 0.5%. Likewise, similar charges on Telecom, Utilities, Agriculture, and Education will be applied with a 0.70% rate of interest.
Mutual funds and Insurance transactions will be levied with a 1% interchange rate. Convenience stores will have to pay a 1.10% of interest rate.
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