New Delhi: The National Payment Corporation of India (NPCI) issued a circular on Friday stating that the UPI Interchange and Payment Service Provider Fees have been withdrawn. This has been done for domestic UPI merchant transaction (P2M), which will be applicable from 1 January 2020. This exemption in fees has been done for an interim period till 30 April 2020. Information about this has also been given in the circular itself.
This decision was taken after withdrawal of MDR
According to the information given in this circular, it will not be applicable to Mandates, EMI and Overdraft accounts and Business-to-Business collections and payments. On such transactions, this fee is charged after fully withdrawing the Merchant Discount Rate (MDR).
The revenue of companies can be affected
Banks are now not charging the bank MDR on RuPay Debit Card and UPI transactions. Since then, it was being speculated that paying fees on such payments for other stakeholders also provides relief. However, after the move of NPIC, the revenue of digital payment companies like Phone Pay, Google Pay, Amazon Pay can be affected. These companies have spent a lot to take the reach of UPI ecosystem to the big market.
It will be difficult for companies providing UPI payments
Since this rule of complete removal of UPI interchange fees from all types of UPI merchant transactions has been implemented from 1 January 2020, it is not yet clear that the fees collected so far will be recovered. or not. After this step, it can be difficult for third party companies like Google Pay, Phone Pay and Amazon Pay to make money.
These companies used to earn from about 0.30 paise to 0.35 paise on every domestic merchant transaction. It will also have to be seen that what will be the way for these companies to raise revenue in future so that they can stay in the market.