The National Payments Corporation of India (NPCI) on Friday said it had agreed to abolish the UPI interchange and payment service provider fees for all domestic UPI merchant (P2M) transactions. Companies like Google Pay and PhonePe are likely to suffer losses due to this decision.
According to the circular of the NPCI, this change in fee will come into effect from 1 January. These charges have been withdrawn for the interim period up to 30 April. This will not apply to Mandates, EMIs, Overdraft Accounts and B2B collections and payments.
The decision aims at abolishing the charges after the abolition of the Merchant Discount Rate (MDR).
Since banks could not charge any MDR from merchants for RuPay debit cards and UPI transactions, it was already expected that they could also be exempted from paying fees to other parties.
The move may affect the earnings of digital payments companies like PhonePe, Google Pay and Amazon Pay. These companies have invested a lot of money in the UPI ecosystem to grab a bigger market.
It is also not clear how the charges already accepted will be refunded, as the decision to abolish the UPI interchange and PSP charges for domestic UPI merchant comes into effect retrospectively from 1 January.
With the elimination of these charges, third-party apps (TPA) like Google Pay, PhonePe, Amazon Pay, etc are left with no scope for earning anything on UPI transactions. On every UPI P2M transaction, these TPAs earn an average of 30–35 p as PSP fee. It’s to be seen what other sources of earning will be available to them to stay in business.
Sirf News had reported in June 2019 that WhatsApp was setting up its data storage facilities in India and preparing for the full launch of its UPI payments app in association with ICICI Bank. A year before that, Facebook-owned WhatsApp had already joined Truecaller and Google in the league of multinational corporations that entered the fast-growing UPI ecosystem to corner a share of India’s digital payments market.
Other private companies today’s decision will affect are as follows.
|Serial number||TPAP/Merchant Name||PSP/Acquiring bank||Handle name|
|1||Samsung Pay||Axis Bank||@pingpay|
|2||Uber India||Axis Bank||@axisbank|
|3||Amazon Pay||Axis Bank||@apl|
|5||Bajaj Finserv Direct Ltd||Axis Bank||@abfspay|
|12||Angel Broking||Yes Bank||@yesbank|
|13||Strucred (Kreon)||Yes Bank||@yesbank|
|14||Reflex(Kaha Technologies)||Yes Bank||@yesbank|
|15||Make My Trip||Yes Bank||@ybl|
|26||Microsoft kaizala||Yes Bank||@yesbank|
|29||Expense on Demand||Yes Bank||@yesbank|
|30||Angel Bee||Yes Bank||@yesbank|
|33||Google Pay||Axis Bank||@okaxis|
|State Bank of India||@oksbi|
|Bank of Baroda||@barodapay|
|36||MI Pay||ICICI Bank||@myicici|
|37||Make My Trip||ICICI Bank||@icici|
|38||Khalijeb||Kotak Mahindra Bank||@kmbl|