Money & Banking

UPI based P2P fund transfers may soon attract charges

Priyanka Pani Mumbai | Updated on April 01, 2019 Published on April 01, 2019

Person to person UPI transactions likely to be chargeable from May 1, 2019.   -  Getty Images/iStockphoto

Banks to charge customers after first 30 UPI transactions

Person to person (P2P) fund transfers using Unified Payments Interface (UPI) may soon be charged. 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.

Kotak Mahindra Bank, for example, has told its customers that there would be charges after first 30 P2P transactions on UPI. Fund transfers to any bank using account number and IFSC code, would be included within the first 30 UPI transactions. After the first 30 free UPIs, every UPI transaction below or equal to Rs 1,000 will be charged Rs 2.50 and above Rs 1,000 will attract a fee of Rs 5 per transaction with an 18 per cent GST.

The bank has, however, clarified that while the merchant payments, online shopping , bill payments etc will continue to remain free and only the person to person (P2P) fund transfers would be chargeable irrespective of the bank accounts and wallets (PhonePe, Paytm, Google Pay) the customers use.

Rohit Rao, Chief Communication Officer, Kotak Mahindra Group said, “We continue to promote UPI as a convenient way to pay. More than 95 per cent of our customers do an average of 5-10 UPI transactions per month. While we continue to offer the first 30 P2P UPI transactions per month at no cost, charges are being introduced only for all subsequent UPI P2P fund transfers, beyond the monthly 30 free transactions. This is intended to prevent abuse of the UPI system and will not impact genuine customers. Receiving money through UPI as well as all merchant transactions continue to be free.”

National Payments Corporation of India (NPCI), an umbrella organisation for all retail payments in India and creator of UPI, could not be reached for comments. Other banks such as ICICI, HDFC and SBI are likely to follow the suit, said sources within the banking industry. In all 139 banks are offering UPI payments as of today.

Experts feel that 30 free transactions are good enough as the charges post that would be only for P2P fund transfers and it would not obstruct normal merchant payments.

According to Worldline India, a global company providing services for electronic transactions, the total volume of UPI transactions in 2018 was 3.7 billion transactions, a 769 per cent increase from the previous year. In terms of value, that translates to transactions worth Rs 5.79 trillion, up by 922 per cent from the previous year.

Worldline India’s report further states that the number of transactions done on mobile wallets in 2018 was 3.98 billion, an increase of 33.4 per cent over 2017. Meanwhile, the value of transactions in 2018 was Rs 1.73 trillion, an increase of 81.46 per cent over the previous year despite the regulatory challenges faced by the wallets with regard to KYC. Though there is no data on how much of this accounts for P2P transactions, industry experts said UPI’s growth has been largely led by P2P transactions.

Published on April 01, 2019
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