Prepaid Payment Instrument (PPI) charges for merchant transactions carried through the Unified Payments Interface (UPI) are in place. A recent circular from the National Payments Corporation of India (NPCI) suggests that the following charges will be applicable on merchant transactions from April 1.

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Using PPIs on UPI from will attract interchange at 1.1 percent on transaction value for amounts over Rs 2,000. For industry programme merchant category codes, the interchange is as follows:

The PPI issuer will pay about 15 basis point as a wallet-loading service charge to the remitter bank and an interchange is not applicable in terms of peer-to-peer (P2P) and peer-to-peer-merchant (P2PM) transactions between bank account and PPI wallet.

Broking firm Equirus says that as per existing guidelines on debit cards, the Merchant Discount Rate (MDR) charges range from 0.3 to 0.8 percent. So, this could be the first step; we may incrementally see interchanges being announced on other modes of payments as well. Equirus says around 65-70 percent of UPI P2PM transactions are of a value of more than Rs 2,000. And so, with introduction of an interchange of about 0.5 to about 1.1 percent, Equirus believes that there is adequate possibility for various stakeholders in the system. So this should be seen positively for credit card companies as the risk of any cap on MDR actually reduces, it says.