India is moving a step closer towards cashless economy by launching some different kinds of online payment media such as Paytm, UPI, IMPS, NEFT, BHIM, and Aadhar Pay. And there is a very good response to all these payment media. In this article, our focus would be UPI. We will share with you all the information regarding UPI Transaction charges. First of all, let’s know what is UPI and how it works.
What is UPI
UPI stands for Unified Payment Interface and it is an initiative of National Payment Corporation of India (NPCI). It is like an e-mail ID or virtual ID for your money which connects multiple bank accounts into a simple mobile application. It merges several banking features, seamless fund routing, and merchant payment under one umbrella. Currently, all the banks have their UPI applications.
How UPI Works
To make an online payment in the present time, you have to enter an account number, IFSC code, account type, Bank Name etc. All this is very painful and time-consuming. But UPI lets you make the online transaction in a simple way without entering much details like other payment media. UPI allows a user to send and receive money from their smartphones, just by using Aadhar Number, Virtual Id, and mobile number. It does not even need your bank account number and name. You can say, it operates on virtual ID which you have created at the time of UPI app. installation.
UPI Transaction Charges
Most people do not know, but let me tell you that UPI transaction charges are zero. Being the government initiative towards the cashless economy, UPI transactions are free of cost till now. As per cashlessindia.gov.in (Government Website to encourage people towards Cashless Transaction) there are no charges for making payments using UPI facility.
However, a payment made from UPI to a bank account using IMPS, NEFT and RTGS, a bank may charge you for it. If you have been charged for a transaction on UPI, then you should consult with your bank, since peer to peer transactions on UPI are free.
UPI Transaction Charges in Future
After many months of zero UPI transaction charges, banks like HDFC are now showing hints to charge money for UPI transactions. On June 6, 2017, HDFC had sent an e-mail to its customers stating that bank will charge money for UPI transactions from 10 July 2017. Other banks have also followed the same move and showed the hints of charging money for UPI transactions.
If UPI transaction charges will really be executed by banks, then a customer will have to pay Rs. 3 plus service tax on UPI transaction between Rs. 1 to Rs. 25,000. And transaction from Rs. 25,001 to Rs. 1,00,000 will be charged with Rs. 5 plus service taxes. However, at the time when we have published this post, we went through major banks’ websites. So far, they have shown that currently there are no UPI transaction charges.
According to NPCI, banks may levy UPI transaction charges but only those pertaining to person to person transfers. Person to merchant transactions will remain free of cost. And this is as per the NPCI guidelines, said by Dilip Asbe, Chief Operating officer of NPCI.
As of now, we are not being charge for any UPI transaction. The banks may levy such charges in the future, but chances are very slim since it is the government’s own program for the cashless economy.