Recently, NPCI has introduced credit card-related changes, which might mean an uptick in the charges on transacting through Rupay credit cards.This is because all variants of Rupay credit cards, namely Classic, Platinum, and Select, are set to see a hike in their interchange fees. However, this will be applicable starting May 1, 2025, and will apply to both domestic and international transactions. According to the circular, GST will also be levied on this interchange fee, “basis a multiplier of 1.1092.”
Will I have to pay this interchange fee?
No. This interchange fee is not levied directly on the consumer, i.e., you, but is paid by the merchant’s bank (acquiring bank) to the card-issuing bank to process transactions every time any customer uses a debit/credit card to make purchases from a merchant’s store.
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Interchange fees are usually charged as a percentage of the transaction amount. Hence, these charges are first paid by the merchant, or seller, to their acquiring bank, i.e., the one that processes all debit and credit transactions on their behalf, which are subsequently paid to the card-issuing bank.
A hike in these charges would mean merchants could potentially pass on these costs to the end user, i.e., you, thereby indirectly impacting your wallets.
What are the present interchange fees charged on RuPay credit cards?
Experts note that existing credit card interchange fees are not fixed and depend on a combination of the merchant’s category and the category of credit cards.
According to Ramakrishnan Ramamurthy, EVP Service Delivery – Digital Commerce Business Worldline India, Worldline Global, Rupay credit card’s existing interchange rates are at par with those of other payment networks such as Mastercard and Visa.
“On average, Rupay credit cards have interchange fees of around 1% for utility merchants and 1.7% for most transactions that take place on e-commerce platforms. The highest interchange fees are generally levied on the travel category, which ranges from anywhere between 1.7% and 1.8%,” he adds.
Experts stress that the lowest interchange fees in credit cards are typically levied on utility-related payments, government services, and basic, entry-level credit cards.
As Jai Kumar, co-founder of TechFini, explains, “Previously, transactions using RuPay credit cards on UPI were largely exempt from fees, particularly for amounts up to Rs 2,000, to encourage digital payment adoption among small merchants and consumers. Currently, on selected merchant category codes, interchange fees are 1.10% to 2.02%, and on a few selected MCCs like government, agriculture, railway, etc., it is 0.70%.”
Sameer Mathur, MD and founder of Roinet Solution, concurs. Per him, the interchange fees for RuPay credit card transactions through UPI currently stand at 0.5% for transactions up to Rs 2,000 and 1.0% for transactions above Rs 2,000 in most merchant categories.
Even Rohit Mahajan, managing partner and founder of plutos ONE, explains that depending on the merchant type and transaction amount, the regular interchange rates for transactions over ₹2,000 usually fall between 1.1% and 1.5%.
What will the interchange charges be after May 1, 2025?
Starting next month, Rupay credit card’s entry category, i.e., the classic variant, will see intercharge fees of 1.10% (for point of sale, physical transactions) and 1.60% for online transactions.
As per NPCI’s recent circular, all merchants under the utility category will face an interchange fee of 1.85% if the transaction is done via a Rupay Platinum credit card and 2.02% if it is done via Select Rupay credit cards starting May 1, 2025.
Notes Kumar, “a higher interchange fee could have significant implications for merchants, consumers, and the overall adoption of RuPay credit cards on UPI. Higher fees may put additional pressure on small and medium-sized businesses; merchants worry about the potential impact on their profit margins, while consumers, who benefit from the convenience of linking RuPay credit cards with UPI for seamless transactions, may reconsider their payment choices to avoid additional costs.”
Interchange fee up to 2.02% for select Rupay Credit cards
The domestic interchange charges for the Rupay Classic credit card for regular programs for e-commerce-related transactions will be at 1.6%, while the same will stand at 1.85% for platinum and 2.02% for select credit cards. Regular programs, as Rahul Jain, CFO of NTT DATA Payment Services India, notes, refer to merchant categories that see a very high transaction volume.
For international transactions made via Rupay DFS Classic, Platinum, and Select credit cards, acquiring banks will have to pay $1.10 for every ATM transaction. On the other hand, for POS transactions, while classic credit cards will see an interchange fee of 1.20%, platinum and select credit cards will incur interchange charges of 1.80% and 2%, respectively.
Which categories might see merchants upping charges due to a hike in interchange rates?
Generally, RBI mandates that merchants should not pass on interchange fees to consumers. However, this month, RBI and NPCI approved an increase in ATM interchange fees effective May 1, 2025. Going ahead, cash withdrawals, after customers have exhausted their free limits, will be charged Rs 19, and non-financial transactions will cost Rs 7.
This raises concerns if interchange fees for credit cards might also be directed towards consumers. However, no official word on this has been announced.
Experts explain that interchange fees are largely higher for categories where discretionary spending is high, such as travel, and lowest for essentials such as education, government services, and more.
