“NPCI will be requesting banks not to charge customers for peer-to-peer UPI transactions at this stage,” a senior banker in the know of the matter “They want to work out a strategy so that at least low-value, peer-to-peer (P2P) payments are not charged.”
NPCI chief operating officer Dilip Asbe told the publication, “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 (Immediate Payment Service). However, person-to-merchant (P2M) transactions in UPI will remain free to customers as per NPCI guidelines.”
Ever since demonetization in November last year, banks have not been charging for funds transfers that take place via the UPI platform, be it person-to-person (P2P) or person-to-merchant (P2M) transactions. However, HDFC Bank being the first one to start off with the free, beginning July 10, P2P transactions will cost Rs 3 plus taxes for transactions between Re 1 to Rs 25,000. Similarly, for transactions, ranging between Rs 25,001 to Rs 100,000, HDFC bank will charge Rs 5 plus taxes.
“For an IMPS transaction, the cost is usually around Rs 2, for UPI the price is 50 paise extra because there is a charge for the fintech player which is the service provider in many cases,” a senior banker told ET. YES Bank and RBL Bank, however, said that they have no plans to start charging for UPI transactions. “We currently absorb costs even for IMPS P2P transactions, so it is no different for UPI,” said Sujatha Mohan, head of digital banking at RBL Bank.
However, if the UPI does continue to be charged even after NPCI’s efforts, it may cause a big dent in the progress the ‘Digital India’ has made till now in terms of cashless transactions. According to recent figures, UPI-based transactions grew more than 20 times since demonetization. As per Mary Meeker Report, UPI’s monthly transaction value shot up from $15 million before November 8 2016 to $359 million by the end of the financial year (March 2017). The report also states that a third of India’s mobile wallet transactions now happen on UPI.