PPI Payment Charges: On Wednesday, the latest update has come from NPCI (National Payment Corporation of India) regarding the charge on UPI payment that the interchange fees imposed recently on UPI payment have no effect on common customers.
Not going to happen. The interchange fee that will be charged on transactions above Rs 2,000 will be applicable only on PPI i.e. Prepaid Payment Instruments transactions. Normal UPI transaction i.e. bank account to bank account transactions will not have to be charged.
‘What is PPI?’- People started searching
After the circular of NPCI, this confusion was removed that no new charge should be given to common customers on UPI transactions, but people definitely started searching what is PPI Payment. If you are also thinking this, then we have written this article only for you.
What is PPI?
According to NPCI, most payments on UPI enabled apps are bank account to bank account based transactions. Their share in UPI transactions is 99.9%. Rest of the PPIs are merchant based transactions.
But what is this? Under RBI’s Payment and Settlement Act, 2005, PPIs or Prepaid Payment Instruments are such payment instruments, in which you buy goods or services or transfer funds, financial services or remittances through store value in advance. Simply put, such payment apps, in which you buy, or transfer something with the money already inserted, that is, through money inserted in mediums like wallet or gift card.
Basically you keep prepaid amount in the app, which is deducted from your bank account or debit/credit card, cash or. PPIs can be in many forms, such as payment wallets, smart cards, magnetic chips, vouchers, mobile wallets, etc. That is, any such instrument or instrument in which you put money in advance, so that transactions can be done with it.
Are there types of PPIs?
Yes, there are many types of PPIs too. According to RBI, PPIs are issued in the country under three systems.
1. Closed System:
Such PPIs can be used only by the institutions that issue them. That is, if a company gives its PPI, then you will be able to use it within its system. Things like gift cards, vouchers, coupons come in this system. RBI permission is not required for issuing such PPIs.
2. Semi-Closed System:
Apart from the issuing institution, such PPIs can be used in some other institutions as well. For example, if one organization has a contract with another, then you can use this instrument at both the places. But such PPIs can be issued by RBI approved banking institutions or authorized non-banking institutions only. Payment aggregators or payment gateways come in such PPIs.
3. Open System:
Debit and credit cards come in this system. These can only be issued by approved banks on behalf of RBI.
