Many articles highlighted that the Indian government has plans to add some transaction charges to UPI payment services. The UPI services have been free for all since its launch. And yes! UPI transactions are playing a vital role in increasing India’s total digital payments.
Undoubtedly, India’s UPI is the best payment system in the world that can transfer money instantly. Even developed countries like the USA and Europe don’t have a system like UPI. We can say that the future of the UPI payment system is bright globally.ย
So, where did this UPI transaction charge debate come from? Recently, the Reserve Bank of India (RBI) released a document called “Discussion Paper on Charges in Payment Systems“. Here, RBI is seeking suggestions from the people of India regarding transaction charges in various payment methods like NEFT, RTGS, IMPS and UPI. If you are interested, feel free to share your thoughts and opinion with RBI.
In this Discussion Paper, RBI said – “While there are many intermediaries in the payments transaction chain, consumer complaints are generally about high and non-transparent charges. Charges for payment services should be reasonable and competitively determined for users while also providing optimal revenue stream for the intermediaries”. To keep everything in balance, it’s always helpful for RBI to conduct a comprehensive review of various charges on payment systems. By highlighting the different service maintenance costs and getting feedback.
RBI generally releases this type of discussion paper on different topics to get users’ feedback/suggestions. And RBI could use the feedback to create new policies or modify existing ones. However, in the end, it is up to RBI whether it implements the suggestions of the users or not.
No charges on UPI Payment
Ministry of Finance, India tweeted to clarify the misinformation circulating on the Internet. They said – “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”.ย Here, the Government of India always takes care of the cost required to maintain the UPI services through taxes etc.
Year after year, more people adopted the mobile-based Unified Payments Interface (UPI). UPI holds a large percentage of total digital transactions in India. According to NPCI data, UPI has done 628.8 crore transactions till July 2022 with a value of 10.62 lakh crores. Indian economy is benefited from UPI.
In addition, the government allocates financial assistance every year to encourage digital payments. Due to this, the overall digital transactions are at a record high across the platform. Also, the government mainly promotes UPI more than any other.
The UPI payment service is so simple that it has, in fact, become a viable option not only for the urban area but also for the rural area. However, the journey of expansion of UPI services is long and adding transaction fees to it may create hurdles in the way to becoming the No. 1 payment system in India.
In short, the Government of India clearly said that they have no plans to add transaction charges to UPI payment services.