In a move that is expected to impact millions of users in India, the National Payments Corporation of India (NPCI) has introduced a surcharge on transactions made through popular payment platforms like Gpay, Paytm, and others. As per the latest circular issued by the governing body of the Unified Payments Interface (UPI) payment system, the surcharge will be applicable on prepaid payment instruments (PPI) fees for merchant transactions.
According to the circular, the surcharge will be levied on transactions above ₹2,000 on UPI, resulting in an interchange fee of 1.1% of the transaction value. The interchange fee is typically charged by the payment system to cover the costs of accepting, processing, and authorizing transactions. The new rule is expected to make transactions costlier for users.
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Starting April 1, prepaid instrument issuers will also have to pay 15 basis points of the fee to the remitter bank for loading a transaction value above ₹2,000. However, it is worth noting that the fee will not be applicable to person-to-person or person-to-merchant transactions between a bank and the prepaid wallet.
This move is likely to have a significant impact on the digital payments landscape in India, which has seen rapid growth over the past few years. While the government has not provided any specific reason for introducing the surcharge, some experts believe that it could be an attempt to generate revenue or encourage users to opt for other modes of payment.
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It remains to be seen how users and merchants will respond to the new surcharge. However, it is clear that digital payments platforms like Gpay and Paytm will need to find ways to mitigate the impact of the surcharge on their users.