Today I saw a trend of #UPI when many news outlets and in turn many people mis understood that UPI payments are going to be charged now on.
There is absolutely no truth about it. But it has a nuance to understand what actually is happening.
When UPI was launched it was a “from” side of payment source. Meaning you link your bank account to any UPI App, use UPI and make payments. Journey started with user making payment to “UPI handle” something like abc@xyzBank.
While UPI needed handle to pay, @Paytm was able to popularise a QR for merchant- A simple scan to make payments.
Once we launched UPI on Paytm. Paytm user were able to pay a merchant from@UPI linked Bank A/c.
Once RBI brought standardisation of QRs — all payment QRs were to be UPI compatible. Making it standard for any UPI to scan the QR and make payment.
So UPI became a scalable “from” side of payment source.
That was going to change next, soon
The Paytm’s QR revolution standardised by UPI and spread across nook & corner of country, became the pride of India. A phenomenon everyone across the world talks about.
Powered by @UPI_NPCI abilities and steered by @RBI ‘s vision of #HarPaymentDigital is headed to change!
Yeh change is that now this QR network working with so many apps is a bigger solution that can power payments form as many sources and not just bank accounts as it began !
Yes imagine not just making payment from linked bank account but also from wallets, cards and so on !!
That’s exactly what started the next level on payment revolution of India.
The UPI QR became the method and carrier. (In payment industry lingo called: Payment Rail)
RBI started to expand possible payment sources and extend power of QR network to so many other sources.
And now UPI was changing role from a payment source to QR led payment destination.
From RuPay Credit cards to Prepaid wallets to credit to as many payments sources you imagine could pay a UPI QR !
Yes! Ain’t it beautiful way to expand power of mobile payments to everyone ?
So when u have different payment source , on a QR for payments — it is like different types of cards used on a POS/EDC / Card machine.
A card merchants’ machine charged are based on card type that is charged.
Different cards (credit/ debit/ prepaid..) different charges.
What ₹ a card machine provider pays to payment instrument source company is called Interchange and this when charged to merchants is called MDR (merchant discount rate) !
And MDR can be higher or lower than interchange as there is other business reason for it !
So when RBI announced prepaid wallets to be allowed to use UPI QR network , it was a great move to expand and support PPI wallet companies!
They don’t have to sign up their merchants instead can become instantly available as payment source on all UPI QRs / merchants !
Now comes the hard part to execute this dream. Our super hero’s of @NPCI_NPCI under dynamic leader @dilipasbe had a tough task.
It added extra variable of making it viable for wallet companies. Remember their business model is based on very few revenue line items.
So just like all other payment source that can pay a UPI QR (bank account , credit overdraft or RuPay Card) this one needed some pricing to be paid to wallet company.
So instead of making it costly for merchants (and always free for consumer !) NPCI announced
NPCI announced interchange of 1.1% for above ₹2,000 payments for payments made using PPI / wallets.
There is absolutely no charge for consumer nor to merchant for payments from UPI linked bank accounts !
It is for QR company to decide how..
It is up to QR company to decide how do they pay this interchange to issuer.
Right now government is paying for payment charges to be charged to merchants for payments from UPI !
Our govt commitment to make good of this charge makes this a superb success!
Remember there is NO charge to consumer for UPI payments from bank account or from wallets (or from RuPay credit cards)
For merchant — ONLY if they agree to accept and ok to pay any charge levied by QR company, they will be activated.
So It is NOT by default that merchant’s QR is accepting some instrument that is charged by QR company.
QR now will offer many payment sources just like on card machine.
Merchant will pick and choose payment instruments (with or without charges) to accept payment from !
It is like on a card machine merchant can disable certain type of cards which charge large fees.
Similarly QR will now offer different instruments with choices. RBI’s master stroke of making QR a payment network will take India’s mobile payment revolution to new heights!
So pls understand again::
NO there is NO #UPICharge for payments above ₹2,000 to consumer or merchants.
PPIs are available as choice to merchants who want to accept them.
Pricing of same is by QR provider and only if merchant accepts, it is enabled.
So let’s join @RBI and make @_DigitalIndia dream possible by making #HarPaymentDigital !
UPI is pride of India 🇮🇳
Let’s kill every rumour around it. You need to help stop spreading of false news that UPI payments will be charged now.
Happy to answer any Qs 😇🙏🏼
Remember ! Customers continue not to pay for any UPI payment transactions.
Merchants have full control of accepting any payment instruments. ✅
PPI / wallet industry is getting big boost by being available on UPI QR network. 👌🏼
India is creating history. 🇮🇳
Originally tweeted by Vijay Shekhar Sharma (@vijayshekhar) on March 29, 2023.