UPI transactions to remain free for customers, clarifies NPCI

The National Payments Corporation of India (NPCI) on Wednesday clarified that bank account-to-account transactions made through the Unified Payments Interface (UPI) continue to be free for both customers and merchants.

Traditionally, the most preferred method of UPI transactions is linking the bank account in any UPI-enabled app for making payments which contributes over 99.9% of total UPI transactions, NPCI said in a statement.

"These bank account-to-account transactions continue to remain free for customers and merchants," the payments body said. Every month, over 8 billion transactions are processed free for customers and merchants using bank accounts.

The clarification comes after NPCI notified that an interchange fee of up to 1.1% will be applicable on merchant UPI transactions made using prepaid payment instruments (PPIs) — wallets or cards — with effect from April 1. These charges will be levied if the transaction is over ₹ 2,000. Fuel stations will be eligible for an interchange fee of 0.5%.

"Prepaid Payment Instruments (PPI Wallets) have been permitted to be part of interoperable UPI ecosystem. In view of this NPCI has now permitted the PPI wallets to be part of interoperable UPI ecosystem. The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers, and it is further clarified that there are no charges for the bank account to bank account based UPI payments (i.e. normal UPI payments)," NPCI said in its clarification.

With this addition to UPI, customers will have the choice of using any bank accounts, RuPay Credit Card and prepaid wallets on UPI enabled apps, NPCI said.

Meanwhile, with reference to recent media articles on 'KYC scams', the NPCI clarified that the connection to UPI is "misleading and incorrect". "We assure all users that any payment through UPI does not expose the sender's KYC details and neither does it lead to a user's mobile or app getting hacked," the operator of UPI said.

According to NPCI, UPI works on the principle of payment using a virtual payment address or UPI ID – using "secure" method of device binding and UPI PIN to transfer money. "KYC details are not used or shared during a UPI transaction. We would like to reassure that UPI continues to remain a safe and secure payment method. The intention of some of these articles/ social media messages are to mislead and thereby create mistrust about a payment method that has been adopted widely across the country," NPCI said.

A total of 95,402 cases of UPI digital payment fraud have been reported in the ongoing financial year up to February 23, 2023, the government told Parliament last week. This is higher than a total of 84,274 cases reported in the financial year 2021-22 and 77,299 during the previous year, the government data showed. "NPCI has informed that though UPI ecosystem has inbuilt security features, minuscule percentage of users get cheated over social engineering calls," Bhagwat Karad, minister of state in the ministry of finance, told the Rajya Sabha.