A Charge of ₹5 Will Apply to Certain Transactions

New Delhi : Major changes have been made to the rules governing online transactions. A charge of ₹5 will apply to certain transactions exceeding ₹2,000, though the service will remain free for customers.

A meeting of the UPI Steering Committee was held today, Tuesday, September 15. During this meeting, it was decided to levy a charge on transactions exceeding ₹2,000.

The country’s payments authority has announced that a charge will apply to UPI transactions above ₹2,000. This new rule regarding the UPI Merchant Discount Rate (MDR) will come into effect on October 15.

The National Payments Corporation of India (NPCI) has also clearly stated that these charges will be levied on merchants, while the UPI service will remain free for customers.

A notification from the Central Government states that banks cannot levy any charges on Unified Payments Interface (UPI) transactions up to ₹2,000 or on payments made using RuPay-powered debit cards.

The NPCI receives a fixed fee of approximately 0.02 bps as a switching fee for every transaction. UPI apps like PhonePe, Google Pay, and Paytm partner with banks to connect to the UPI network; these partners are known as PSP (Payment Service Provider) banks.

Yes Bank, Axis Bank, ICICI Bank, HDFC Bank, and SBI are the largest PSP banks in the UPI ecosystem. PSP banks play a crucial role in ensuring the success of UPI; therefore, unlike in the card ecosystem, they are likely to receive a significant share of the MDR.

MDR is the commission that merchants pay to banks for processing digital payments. Revenue generated from MDR is shared among ecosystem partners. These include account-issuing banks, beneficiary banks, consumer-side Payment Service Provider (PSP) banks, merchant-acquiring payment aggregators, and the NPCI.

Report – Abhijit Tushar Bhatt (Political Editor)