The Unified Payment Interface or simply UPI, has become an integral part of the fiscal paradigm of the country over the past few years. In a recent development surrounding the same, according to an exclusive report from Moneycontrol, the National Payments Corporation of India, which regulates and runs the UPI, is expected to fix a 1.2 per cent interchange on credit lines on UPI transactions.
Interchange on UPI Transactions
According to the same report, an official circular on the same will be issued in the public domain next week.
The credit line on UPI was introduced in 2023. This system is touted as a seamless UPI payment solution for customers and it is deemed a pre-sanctioned credit limit linked directly to the UPI ID of an account holder. | Representative Photo
Here, an interchange is the amount or, in this case, the commission credit users receive from the merchant for every transaction that they make.
The credit line on UPI was introduced in 2023. This system is touted as a seamless UPI payment solution for customers and it is deemed a pre-sanctioned credit limit linked directly to the UPI ID of an account holder.
It is to be noted that interchange accounts for about 90 per cent of the merchant discount rate (MDR) that the aforementioned merchants pay banks for making transactions happen.
The entity issuing the credit gets a chunk of the said commission. Meanwhile, other stakeholders, including, card networks, customer bank accounts, merchant banks and the UPI regulator, NPCI, get the remainder of it. | Canva
Credit Line on UPI
The entity issuing the credit gets a chunk of the said commission. Meanwhile, other stakeholders, including, card networks, customer bank accounts, merchant banks and the UPI regulator, NPCI, get the remainder of it.
According to the Moneycontrol report, negotiations are still ongoing between the NPCI and the UPI Apps over who gets what, and where the share of the revenue goes.
Currently, banks that are providing this service include, Axis Bank, HDFC Bank, ICICI Bank, Indian Bank, Punjab National Bank and State Bank of India. In addition, the third-party apps that provide this service are Bhim, Google Pay, Paytm, Payzap, Navi and Tata Neu.
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