NPCI likely to fix 1.2% interchange for pre-sanctioned Credit Line (CL) on UPI, issue circular next week

NPCI likely to fix 1.2% interchange for pre-sanctioned Credit Line (CL) on UPI, issue circular next week.

The National Payments Corporation of India (NPCI) is likely to announce an interchange of 1.2 percent for credit line on UPI transactions, according to multiple sources participating in discussions over the proposal.

NPCI, which runs the popular mobile payments platform Unified Payments Interface (UPI), is likely to issue a circular next week.

Interchange is the commission that the merchants pay to the credit issuer for every transaction. It makes up 90 percent of the merchant discount rate (MDR) that the merchants pay the banks for facilitating the transaction.  The credit issuer get 100 percent of the interchange, while others get some 5-15 basis points. Others include card networks, customer bank account, merchant bank and NPCI. Interchange partly pays for the risk and interest for the capital deployed by the credit issuer. The consumer does not pay any fee in this transaction.

Credit - Money Control