Prepaid UPI

What is in the News?

• National Payments Corporation of India (NPCI) on Wednesday said has permitted the PPI wallets to be part of interoperable UPI ecosystem and levied 1.1 per cent charge on unified payment interface (UPI) transactions above  ₹2,000 while using PPI. 

 The New Guidelines

• The new guidelines, effective from April 1st, levy a 1.1% charge on UPI transactions above ₹2,000 while using PPIs.
• The charges are only applicable for PPI merchant transactions, and there are no charges for the bank account to bank account-based UPI payments.
• PPIs : The payment and Settlement Act, 2005 defined Prepaid Payment Instruments (PPIs) as instruments of payment that facilitate buying of goods and services, including the transfer of funds, financial services and remittances, against the value stored within or on the instrument. Online wallets like PAYTM wallets, Amazon Pay wallets and preloaded gift cards.

 Significance

• The move is expected to help UPI merchants, who can accept wallet payments regardless of the wallet being used by the customer, thereby increasing payment alternatives for customers.
• The interoperability of KYC wallets will also eliminate the need for customers to carry multiple cards and reduce fraud and theft.

 NPCI

• The National Payments Corporation of India (est. 2008, HQ: Mumbai) is an umbrella organization for operating retail payments and settlement systems in India, is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
• It is a not-for-profit organisation registered under Section 8 of the Companies Act 2013.

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