Banks could soon charge transaction fee for UPI payments

By : |June 6, 2017 0

While the government is trying to push a cashless economy in the country by promoting UPI payments, looks like public may soon have to pay a fee even for that.

Last year, the government launched a free initiative called Unified Payments Interface (UPI), to encourage people to transfer money directly between two bank accounts using just a mobile app. Though many banks followed the government’s regulation and launched their respective UPI apps without charging a transaction fee, they are now reportedly planning to charge for the service.

In an email sent by HDFC to some of its customers, the bank informs its customers that “all UPI outward transactions will be chargeable from 10th July 2017.”

According to the email, which was shared on Reddit by a user named Gatiman, the bank will charge Rs 3 plus taxes for transactions of Rs 1 to Rs 25,000. For transactions between Rs 25,001 to Rs 100,000, the fee will be Rs 5 plus taxes. However, Person to Merchant (P2M) transactions in UPI will remain free to customers as per NPCI guidelines.

The said move could disturb the digitization course, because if small transactions with merchants are also charged, then users would naturally prefer using cash rather than paying using an app.

Currently, though HDFC is the only one charging for the service, however, other banks are expected to follow the course soon.

In an emailed statement, HDFC wrote to NDTV, “We have provided Unified Payments Interface (UPI) platform to banks and other institutions for their customers. So far, no bank is charging for UPI transactions, but at the same time, it is at their discretion to levy a reasonable fee towards Person to Person (P2P) transactions for UPI and IMPS. However, Person to Merchant (P2M) transactions in UPI will remain free to customers as per NPCI guidelines.”

UPI is a one-touch transaction for transferring money between any two parties using a ‘unique virtual address’ on a smartphone. Once a beneficiary is added to the address, an MPIN ensures transaction within seconds. The move on government’s part was to boost digitization in the country.

The UPI payments follow the IMPS (Immediate Payment Service) structure of payments. IMPS transactions allow real-time 24×7 transfer of money between parties with the use of IFSC codes and MMID.

UPI

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