Unified Payment Interface (UPI) was launched last year by National Payments Corporation of India and the RBI, in a bid to facilitate instant fund transfer between two bank accounts, using mobile devices.
Even though UPI is built on top of IMPS, unlike IMPS, there was no fee for transactions made through UPI, until now!
Now HDFC Bank has sent out official communication to some of its customers, that they will start charging for the UPI transactions from the 10th of July 2017.
While there is no word yet on whether other banks will start charging their customers for UPI transactions as well.
However, if they do, then UPI’s future, at least as far as small transactions go, looks very bleak. Since UPI was being promoted by the government during the demonetization exercise as an easy, secure and a free way to pay for small ticket items and even grocery and move towards a cashless or at least a less cash economy.
Now with Rs. 3 plus tax being charged even for a transaction as small as Rs. 20 which you may be paying to a fruit or grocery seller, UPI loses its relevance as a mobile transaction system for small ticket items. After all, Rs. 3 plus taxes for a Rs. 20 transaction is 15% transaction charge.
This also means, PayTM and other mobile wallets, which do not charge such transaction fees, will continue to enjoy popularity in the case of small priced items. With UPI being relegated to the same league as IMPS for money transfer.