Who has to pay an extra fee on UPI transactions from April 1?

There are some changes coming to UPI starting April 1 this year. The National Payments Corporation of India (NPCI) is allowing the integration of digital wallets with UPI. But for merchant outlets, it will come up with some extra costs over a certain amount.

Does this mean that UPI transactions are now paid services?

No!

Indians have been spoilt in the way they make their payments. Hardly anyone has cash on them anymore. Even a Rs 10 tea comes straight out of the bank accounts linked with UPI. And if someone tries to go back to the good ol' days of cash use, good luck getting the change.  

[ALSO READ: I paid for everything in cash for 10 days and it was a nightmare in Digital India]

• But no, UPI account-to-account transactions are not going to cost a hole in your pocket or cost you anything extra.  
• However, payments over Rs 2,000 using digital wallets like Paytm, PhonePe, etc to UPI at merchant outlets will cost an extra 1.1% interchange fee. 

NPCI Press Release: UPI is free, fast, secure and seamless
Every month, over 8 billion transactions are processed free for customers and merchants using bank-accounts@EconomicTimes @FinancialXpress @businessline @bsindia @livemint @moneycontrolcom @timesofindia @dilipasbe pic.twitter.com/VpsdUt5u7U

— NPCI (@NPCI_NPCI) March 29, 2023

What is the newest change?

Having an entire bank account linked to UPI and available on phone hasn't really helped people manage their finances. One of the ways I tried to overcome this problem was by distributing the expenses. Instead of paying for my day-to-day expenses straight from my bank account, I transferred a set amount monthly to my Paytm wallet. This way I knew I had to survive on a budget and my finances were clearer. 

However, I discovered that UPI payments did not accept wallet payments. 

UPI transactions linked to bank accounts have no charges.

UPI transactions linked to wallet transactions also will have no charges as the merchant will absorb the transaction fee and is applicable for cases of the value of transactions of more than 2000₹. (4/4)

— Krishna Kumar Murugan (@ikkmurugan) March 29, 2023

• This is the latest integration that NPCI is allowing. Now, users can pay directly from wallets to UPI. 
• And anything over Rs 2,000 at a merchant outlet will be chargeable. 
• The fee will be levied on the merchant end, meaning that a seller may or may not pass on the fee to the customer. 
• Rest assured, your UPI or wallet payments to friends and family for any amount remains free (as of now... and forever we hope). 
• The integration of wallets with UPI comes after NPCI allowed credit cards to be linked with UPI.   
• An interchangeable fee is usually paid by the bank of the receiver to the bank of the payer (or in this case the wallet). 
• This will increase revenue for banks that are said to be struggling with the high cost of UPI transactions. 
• The fee will once again be reviewed by September 30, 2023.