The finance ministry has clarified that there will be no charges levied on UPI payments, after a buzz was created regarding the same following the publishing of RBI’s discussion paper that sought opinions from stakeholders on making UPI chargeable. In a tweet on late Sunday, the finance ministry said there is no consideration in the government to levy any charges for UPI services. Currently, there are no charges levied on transactions done through UPI.
Here is a closer look on the news around charges on UPI services and what the Reserve Bank of India (RBI) and the government said.
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No Charges to be Levied on UPI Services: Govt
In a late night tweet on Sunday, August 21, the finance ministry said, “UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means.”
“The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly,” it said.
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The government has mandated a zero-charge framework for UPI transactions with effect from January 1, 2020. This means that charges in UPI are nil for users and merchants alike.
What RBI Has Said
Last week, an RBI discussion paper said UPI as a fund transfer system is like IMPS and therefore, it could be argued that the charges in UPI need to be similar to charges in IMPS for fund transfer transactions. “UPI as a funds transfer system is like IMPS. Therefore, it could be argued that the charges in UPI need to be similar to charges in IMPS for fund transfer transactions. A tiered charge could be imposed based on the different amount bands,” said the central bank.
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However, it had also issued a disclaimer on the same. “At this stage, it is reiterated that the RBI has neither taken any view nor has any specific opinion on the issues raised in this discussion paper,” said the RBI in the discussion paper.
“If charges are introduced, should they be administered (say, by RBI) or be market determined,” the RBI asked in the discussion paper.
PM Modi’s Take on UPI
On August 2, weeks before the RBI relased its discussion paper, Prime Minister Narendra Modi had hailed UPI transactions crossing 6 billion in July “It indicates the collective resolve of the people of India to embrace new technologies and make the economy cleaner,” Modi had tweeted at the time. UPI reported 6.28 billion transactions amounting to Rs 10.62 trillion, according to data released by the National Payments Corporation of India (NPCI) — the highest number ever.
