Interchange Charge: Unified Payments Interface (UPI) may issue a notification regarding 1.2 percent interchange for credit line on transactions. Interchange helps to cover the risk and interest associated with the capital invested by the credit issuer. Merchants pay this fee.
Interchange Charge: People can now get loan facility from UPI in the coming days. Because the National Payments Corporation of India (NPCI) is now preparing to implement new rules. Actually, Unified Payments Interface (UPI) can issue a notification regarding 1.2 percent interchange for credit line on transactions. Moneycontrol quoted several sources as saying that NPCI can issue a circular in this regard next week. Credit line on UPI is essentially a pre-approved loan, which is available to customers who have a bank account linked to their UPI ID.
Many services are available through UPI. Now credit line i.e. loan will also be added to it. Users whose account is linked will be able to avail the loan facility.
Transaction facility
This credit facility can offer different products from different banks participating on the UPI platform. Interchange is a fee paid to the merchant’s credit issuer for each transaction, which is 90 percent of the merchant discount rate given to banks for transaction facility. The credit issuer gets the full 100 percent of the interchange, while others, such as card networks, customer bank accounts, merchant banks and NPCI get 5-15 basis points (BPS).
Interchange credit helps cover the risk and interest associated with the issuer’s capital invested. This fee is paid by the merchant. In this, consumers do not have to bear any additional cost in the transaction.
Negotiations between NPCI, banks and UPI apps
Negotiations are going on between NPCI, banks and UPI apps regarding revenue share and work function. Third party apps like PhonePe, Google Pay and Paytm are likely to get 0.08 percent or 8 basis points commission on every transaction. Interchange fee will not be applicable on person to person (P2P) transactions or peer-to-peer-merchant (P2PM) transactions. So, if you are sending money to friends, family or to the bank account of another person or small business merchant, then there will be no interchange fee.
