Government imposes surcharge for Google Pay and other payment apps

Starting from April 1, the National Payments Corporation of India (NPCI) has implemented interchange fees of up to 1.1 percent for prepaid payment instruments used in merchant UPI transactions. The fee, ranging from 0.5 percent and based on the merchant category code, will be charged for UPI payments exceeding ₹2,000 made to online merchants, large merchants, and small offline merchants.

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Need of The Interchange fee:

• The purpose of imposing an interchange fee is to compensate for the expenses incurred by payment service providers in handling, verifying, and approving transactions.
• Consequently, this fee increase is anticipated to result in higher transaction costs.
• Wallet issuers such as banks receive payment from payment service providers in the form of interchange fees.
• These wallets are primarily utilized for online transactions, such as those facilitated by Paytm, PhonePe, and Google Pay.

About National Payments Corporation of India (NPCI):