Will Customers Now Have to Pay for Transactions Made Via UPI? Explained

The Unified Payments Interface (UPI) has revolutionized the digital payments landscape in India, providing users with a fast, convenient, and secure way to transfer money and make payments. One of the key attractions of UPI has been the free transactions for most of its services. However, recent developments have raised concerns about whether customers may now have to pay for transactions made via UPI. In this blog, we will delve into this issue, exploring the reasons behind these concerns and their potential implications for UPI users.

Background: UPI and Free Transactions

Since its inception, UPI has offered free transactions for users, making it an attractive option for those looking to transfer money or make payments without incurring any additional costs. This feature has played a significant role in the rapid adoption of UPI across the country and has driven its growth as a popular digital payment platform.

Recent Developments: UPI Transaction Charges

The National Payments Corporation of India (NPCI) recently issued a notification to banks permitting them to levy charges on merchant transactions made through Prepaid Instruments like payment wallets using UPI. The NPCI has clarified that normal bank-to-bank transactions would not be charged and that customers would not be required to pay for transactions made by payment wallets on UPI. The new interchange charges were only applicable to merchant transactions via payment wallets, similar to charges levied on card transactions to cover the transaction cost.

Impact on Customers

Given the NPCI's clarification, it is important to understand that the proposed charges would not affect the majority of UPI users who engage in regular bank-to-bank transactions. The new charges would only apply to a specific category of transactions, i.e., merchant transactions made through payment wallets using UPI. This means that customers who use UPI for normal bank-to-bank transactions can continue to enjoy free transactions without any additional costs.

However, customers who frequently use payment wallets for merchant transactions via UPI may need to be mindful of the potential charges. They may want to explore alternative payment methods or choose a platform that does not levy charges for such transactions.

Possible Alternatives for Customers

• Choose a Payment Wallet with No Transaction Charges

The first step to avoid potential charges on merchant transactions is to choose a payment wallet that does not impose transaction fees. While most payment wallets in India offer UPI-based transactions without any charges, some may levy fees for specific services or transaction types. Research different payment wallets, review their fee structures, and select one that does not charge for UPI-based merchant transactions.

• Stay Informed About Your Bank's UPI Charges

Some banks may impose charges on certain UPI-based transactions, such as transferring money to non-UPI bank accounts or making a high volume of transactions within a specific time frame. Stay informed about your bank's UPI charges by reviewing their fee structure or contacting their customer support. By understanding the applicable charges, you can make informed decisions about using UPI for merchant transactions.

• Monitor Changes in UPI Charges

Banks and payment wallets may periodically revise their UPI charges. Stay updated on any changes in fee structures by regularly checking the bank or payment wallet's website or subscribing to their notifications. By staying informed about changes in UPI charges, you can adapt your payment habits to avoid potential fees.

Conclusion

The recent notification by the NPCI concerning the introduction of charges on merchant transactions made through payment wallets using UPI has caused some concerns among users. However, it is crucial to understand that these charges would not affect regular bank-to-bank transactions, and customers can continue to enjoy free transactions on the platform. Those who frequently use payment wallets for merchant transactions via UPI may need to explore alternative payment methods or choose a platform that does not levy charges for such transactions.