All You Need to Know About New UPI Wallet Payment Transaction Fees!
UPI, or Unified Payments Interface, has become a popular method of digital payment in India, with more than 200 million transactions taking place each day. This system allows users to transfer money between bank accounts instantly and securely, using their mobile phones. The convenience and ease of use of UPI have made it a preferred mode of payment for many people in India. The Indian government also states that the growth of digital payments in India has led to an ease of living for most citizens and has helped the economy, especially during the COVID-19 pandemic.
However, the increasing popularity of UPI has put a strain on the banking system. Banks have been struggling to keep up with the high volume of transactions, which has led to delays and technical glitches. This has prompted the National Payments Corporation of India (NPCI) to introduce the new policy of charging a fee for transactions over Rs. 2,000.
Starting April 1, 2023, UPI transactions of more than Rs. 2,000 will be charged at a rate of 1.1 percent. The NCPI has announced this new policy, which is aimed at reducing the burden on banks and promoting digital payments. The fee of 1.1 percent may seem small, but it will add up for frequent UPI users. For example, if you make a transaction of Rs. 10,000, you will be charged a fee of Rs. 110. This could discourage some people from using UPI for large transactions, which could reduce the burden on the banking system.
The NPCI has said that the new policy is aimed at promoting digital payments and reducing the use of cash. This is in line with the Indian government’s push for a cashless economy. By encouraging people to use digital payments, the government hopes to reduce the amount of black money in circulation and increase transparency in financial transactions.
However, some experts have criticized the new policy, saying that it will hurt small businesses and individuals who rely on UPI for their daily transactions. They argue that the fee will be an additional burden on people who are already struggling to make ends meet. In response to these concerns, the NPCI has said that it will exempt transactions made by small merchants and businesses from the fee. This means that transactions made by merchants with an annual turnover of less than Rs. 20 lahks will not be charged the fee.
Overall, the new policy of charging a fee for UPI transactions over Rs. 2,000 is a mixed bag. While it may reduce the burden on the banking system, it could also discourage some people from using UPI for large transactions. The exemption for small merchants and businesses is a welcome move, but it remains to be seen how effective it will be in practice. As UPI continues to grow in popularity, it will be important to strike a balance between promoting digital payments and ensuring that they remain accessible and affordable for all. As mentioned above, the fee will be charged beginning 01st April 2023 and will be reviewed by 30th September 2023.