This is likely to range somewhere between 1%- 1.2% of the transaction amount
Currently, the credit card transaction interchange fee is charged at 1.8%- 2%
Other than a few banks such as Axis Bank, State Bank of India, ICICI Bank among others, the facility is also available on fintech apps like Paytm, Google Pay, BHIM, etc
In an effort to drive the adoption of credit on the Unified Payment Interface (UPI), the National Payments Corporation of India (NPCI) is exploring an interchange fee structure lower than that for a credit card transaction.
As per Business Standard’s report, citing sources, these charges could range between 1% and 1.2% per transaction. Currently, the credit card transaction interchange fee is charged at 1.8%- 2%.
It is pertinent to note that at present there is no defined interchange fee for credit lines on UPI by NPCI.
Meanwhile, fintechs have aligned with the thought that the fee should be less than this amount.
On this, Kiwi’s chief business officer Mohit Bedi said, “The interchange fee basically varies by the merchant category. I believe the interchange fee for credit lines should be lower than that of credit cards, but how much lower is still to be clarified.”
A credit line over UPI is a pre-sanctioned loan from the bank. However, it has not been adopted well because of the lack of clarity on the interchange fee between the banks and the NPCI.
Other than a few banks such as Axis Bank, State Bank of India and ICICI Bank among others, the facility is also available on fintech apps like Paytm, Google Pay, BHIM, and others.
Though major banks of the country are ready to offer credit lines on UPI, they are waiting for clarity on the interchange fee, a person in the know told BS.
Credit lines on UPI received approval from the Reserve Bank of India (RBI) last September. Back then, the central bank said that the banks may stipulate terms and conditions for credit lines as per their board-approved policies. These terms may include credit limit, period of credit, interest rate, among others.
This move aligned with RBI and NPCI’s goal of deeper UPI penetration across India.
Recently, fintech startup PayU announced the launch of this feature on its platform.
