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Interchange Charge ON PPI Merchant Transactions

  • 31 Mar 2023
  • 3 min read

Why in News?

Recently, National Payments Corporation of India (NPCI) clarified that there are no charges for bank account - to - bank account based UPI payments.

  • NPCI stated that an interchange charge of 1.1% has been introduced on UPI transactions made through PPI instruments above Rs 2,000, and there is no charge to customers.
    • Also, NPCI has permitted the PPI wallets to be part of interoperable UPI ecosystem.

What are Prepaid Payment Instruments?

  • The RBI defines PPIs as payment instruments that facilitate the buying of goods and services, including the transfer of funds, financial services, and remittances, against the value stored within or on the instrument.
    • PPIs are in the form of payment wallets (like Paytm Wallet, Amazon Pay Wallet, PhonePe Wallet, etc.)), smart cards, mobile wallets, magnetic chips, vouchers, etc. As per the regulations, banks and NBFCs can issue PPIs.

What is National Payments Corporation of India?

UPSC Civil Services Examination, Previous Year Question (PYQ)

Q1. Which one of the following links all the ATMs in India? (2018)

(a) Indian Banks’ Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India

Ans: (c)

Q2. Consider the following statements: (2017)

  1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
  2. NPCI has launched RuPay, a card payment scheme.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only 
(c) Both 1 and 2 
(d) Neither 1 nor 2

Ans: (c)

Source: IE

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