In recent years, digital payments have gained immense popularity in India due to the convenience and ease they offer. One such mode of digital payment is the Unified Payments Interface (UPI). While UPI transactions have several benefits, including quick and hassle-free payments, there are some charges associated with them that users need to be aware of. In this article, we will explore the reality of charges associated with UPI payments and how you can manage them effectively.
- The acronym UPI stands for Unified Payments Interface, which is a digital payment system that facilitates money transfers between individuals. As of now, there are no charges for UPI transactions.
- However, a recent announcement by the National Corporation of India (NPCI) has caused confusion among people who use UPI for their day-to-day transactions.
- The question arises whether UPI payments will now be free or chargeable.
- The NPCI has clarified that transactions directly from one bank account to another will remain free.
- There are three ways to transfer money via UPI: through a Virtual Payment Address (VPA), which is a unique address created by your bank; via account number; or through an IFSC code or QR code. The VPA acts as a digital identity for UPI transactions.
- The NPCI has declared that the basic services of UPI will continue to remain free.
- However, a recent circular has suggested that starting from April 1, 2023, UPI transactions made via prepaid instruments such as wallets or cards will attract a fee of 1.1% for certain merchant payments.
- These interchange fees will only be charged for payments above Rs. 2000 to certain merchant categories. It is important to note that there is no fee for UPI transactions up to Rs. 2000.
- This fee will only apply when a customer has a wallet of one particular company and makes a payment to a merchant who has a wallet of another company.
- Some examples of wallets are Paytm Wallet, Phone Pe, Mobi Kwik Wallet, and SODEXO. However, normal customers do not need to worry as this circular only applies to merchants.
To summarize, the recent notification from the NPCI has clarified that Unified Payments Interface transactions from one bank account to another will remain free. However, starting from April 1, 2023, certain merchant payments made through prepaid instruments such as wallets or cards will attract a fee of 1.1%. This fee will only be applicable for payments above Rs. 2000 to certain merchant categories. It is important to note that this fee does not apply to normal customers. If you have any further questions, feel free to ask.