Business News

UPI Payment Service Charges: UPI Transactions To Remain Free. Know The Government Clarification

August 22, 2022
Bharat Times

New Delhi: The government on Sunday clarified its stance on levying charges on Unified Payments Interface (UPI) services saying UPI is a digital public good with immense convenience for the public and productivity gains for the economy. Stating that UPI would remain free, the finance ministry tweeted, “UPI is a digital public good with immense convenience for the public and productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means”.

The fear over the charges was as a result of the RBI’s discussion paper on charges in the payment system suggesting that UPI payments might be subject to a tiered charge based on various amount brackets.

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Issued earlier this month the RBI paper said, UPI as a fund transfer system is like IMPS and therefore, it could be argued that the charges in UPI need to be similar to charges in IMPS for fund transfer transactions.

In a separate tweet, the finance ministry said, “The govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly”.

At present, there are no charges levied on transactions done through UPI. The government has mandated a zero-charge framework for UPI transactions with effect from January 1, 2020. This means that charges in UPI are nil for users and merchants alike.

Earlier, Prime Minister Narendra Modi had praised the UPI transactions crossing 6 billion in July.

The number of digital transactions in July touched the highest ever since 2016. UPI reported 6.28 billion transactions amounting to Rs10.62 trillion, according to data released by the National Payments Corporation of India (NPCI).

Payment systems such as RTGS and NEFT are owned and operated by the central bank. Systems like IMPS, RuPay, UPI, etc, are owned and operated by the National Payments Corporation of India (NPCI).