NPCI Mulls Lower Interchange Fee To Increase Adoption Of Credit On UPI: All About It

In a bid to drive the uptake of credit on the United Payments Interface (UPI), the National Payments Corporation of India (NPCI) is considering implementing an interchange fee structure lower than that for credit-card transactions.

As reported by Business Standard, sources familiar with the matter have indicated that these charges could range between 1 per cent to 1.2 per cent per transaction, significantly lower than the typical interchange fee of 1.8 per cent to 2 per cent for credit cards.

Currently, there is no defined interchange fee for credit lines on UPI by NPCI and a credit line on UPI represents a pre-sanctioned loan from banks.

Despite the availability of credit lines from major banks like Axis Bank, HDFC Bank, ICICI Bank, Punjab National Bank, and State Bank of India, uptake has been slow due to the lack of clarity on interchange fees.

Its important to note that NPCI had introduced the credit line on UPI facility in September last year, allowing customers to access pre-sanctioned credit from banks using UPI rails.

However, commercial details are yet to be finalised.

Once the interchange fee is determined, it is expected that banks will accelerate their partnerships to offer credit on UPI to customers.

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