In a what comes as no less than a surprise, especially after infamous Demonetization that was termed by government as strategy for cash-less economy, Person to person (P2P) money transfers using Unified Payments Interface (UPI) may soon be charged by Banks and Kotak Mahindra Bank has already announced this. This include customers doing digital transactions using BHIM, Phone Pe, Google Pay etc., for which the Banks are going to charge a specific amount.
Currently, the UPI transactions, for both person to person or person to merchant, do not attract any charges. However, some banks have already started sending notifications to their customers stating that person to person UPI transactions would be chargeable from May 1, 2019 onwards.
For P2P fund transfer, Kotak Mahindra has recently notified its customers that while the first 30 P2P transactions on UPI will be free, after this 30 transaction limit, the bank will charge Rs. 2.50 for every transaction worth Rs. 1000 or less and a fee of Rs.5 will be levied on transactions above Rs.1000, which will be applicable across all the UPI platforms including Paytm, PhonePe, Google Pay and others.
It is to be noted however that all other customer payments of online shopping, transport services and bill payments would remain free irrespective of the banks and UPI platforms.
According to multiple media sources, other banks such as ICICI, HDFC and SBI are likely to follow the suit. As of March 2019, there are 142 banks that are offering UPI payments to their customers.
National Payments Corporation of India (NPCI), an umbrella organisation for all retail payments in India and creator of UPI, hasn’t commented on these new and unwanted changes on UPI transactions.
Currently, UPI mode of payment is the only mode of free payment transfer in the country and according to NPCI website, close 800 million transactions worth Rs. 1,33,460 crore were done in March 2019 alone. Over the last one year, there has been over 300% rise in the volume of UPI transactions and this growth is seen continuing over the near term.
In January, Paytm, Google Pay and PhonePe have recorded more than 220 million UPI transactions.
In August last year, NPCI launched UPI 2.0 with several new features, including an overdraft facility enabling customers to link their overdraft accounts to the payments system.
In September 2016, it was reported that NPCI has filed patent for UPI in India and had even filed patents abroad as well, which makes UPI as the second Indian homegrown technology platform that would export to other parts of the world after Aadhaar.