NPCI May Fix 1.2% Interchange For Credit Line On UPI Transactions: Report

The National Payments Corporation of India (NPCI) is likely to announce an interchange of 1.2% for credit line on UPI payments.

NPCI, which runs the widely used digital cashless payments portal Unified Payments Interface (UPI), is likely to issue a circular next week, as per Moneycontrol’s report.

Interchange refers to the fee charged per transaction on the merchant’s bank account which must be paid whenever a customer makes a purchase from their store. In this case, any credit mode of payment made through UPI will possibly be charged by the NPCI.

The long run conversations around the interchange transaction fee has been around for some time in 2024. Earlier this year, NPCI already began exploring an interchange fee structure lower than that for a credit card transaction, where charges could range between 1% and 1.2% per transaction. 

Citing multiple sources, the report further said, the discussions are not final and the rates could change. The payment service provider (PSP) bank that powers the UPI function for TPAPs is also likely to get around 8 basis points as commission for the transaction.

“The success in this case will be determined by the UPI apps that will nudge the customers to try a new credit product. Rupay credit cards on UPI have been a great success. This should work too given the major irritant has now been addressed,” a fintech startup’s founder was quoted in the report as saying.

As per the NPCI data, the UPI transaction volume in June stood at INR 20.07 Lakh Cr, 1.9% lower than May’s INR 20.45 Lakh Cr, while compared to a year ago, the transaction volume surged 36%.

Meanwhile, in a mission towards its international expansion, NPCI’s international arm NIPL partnered with the UAE-based Network International to fuel UPI payments in the Middle Eastern country, a week ago.