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UPI Charges

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In accordance with the guidelines set by the National Payments Corporation of India (NPCI), there are no charges for UPI payments conducted between bank accounts or regular UPI payments. However, for transactions involving Prepaid Payment Instruments (PPI) merchants, interchange charges are applicable. PPIs are digital wallets that enable users to store funds and facilitate payments.

The NPCI has put forth a proposal suggesting an interchange fee of up to 1.1% for UPI transactions exceeding Rs 2,000 conducted through PPIs. This fee will be borne by the merchant’s bank, receiving the payment, and will be directed to the payer’s bank, facilitating the payment. The aim of this proposal is to generate additional revenue for banks and payment service providers grappling with the elevated costs associated with UPI transactions.

The Reserve Bank of India (RBI), the regulatory authority for payment systems in India, is anticipated to review and finalize the interchange pricing for such transactions by September 30, 2023.

What are UPI Charges?

The term UPI charges pertains to the fees imposed by banks or payment service providers for the processing of UPI transactions. The specific charges can fluctuate based on the bank or service provider and the nature of the transaction. Some entities may provide UPI transactions without any charge, while others might apply a modest fee for each transaction.

How do UPI Charges Work?

These charges are instituted by banks or payment service providers to cover the expenses associated with UPI transaction processing, which may include server maintenance, security measures, and other operational costs. UPI charges can be implemented through various methods, including:

  1. Per Transaction Charges: Some banks and payment service providers levy a nominal fee for each UPI transaction, the amount of which can differ between institutions.

  2. Monthly Charges: Certain banks and payment service providers may impose a monthly fee for utilizing UPI services, which could be waived under specific conditions like maintaining a minimum account balance.

  3. Cash Withdrawal Charges: In some instances, banks might charge a fee for cash withdrawals conducted using UPI.

  4. International Transaction Charges: If UPI is employed for international transactions, certain banks or service providers may apply charges for such activities.

  5. Other Charges: Additional charges such as SMS fees or transaction decline charges might be introduced by some banks and payment service providers.

It is crucial to note that the UPI charges structure can diverge from one institution to another. Therefore, individuals are advised to verify the charges with their respective banks or payment service providers before engaging in UPI transactions.

How to Avoid UPI Charges?

While some entities may levy fees for UPI transactions, there are strategies to circumvent these charges. Consider the following tips:

  1. Opt for a Bank or Payment Service Provider with Free UPI Transactions: Many banks and payment service providers extend UPI transactions without charges. Choosing an entity that offers free UPI transactions can help in avoiding associated fees.

  2. Maintain a Minimum Balance: Some institutions may waive UPI charges if the account maintains a minimum balance. Ensuring a minimum balance in the account can be a means to sidestep UPI charges.

  3. Utilize UPI for Small Transactions: Certain banks or service providers might exempt UPI charges for smaller transactions. Opting for UPI in the case of smaller transactions can result in savings.

  4. Verify Charges Before Transactions: It is essential to confirm with the bank or payment service provider about applicable charges before initiating UPI transactions. This precautionary step aids in steering clear of unexpected charges.

Conclusion

Understanding and acknowledging UPI charges is imperative for users. While certain institutions may provide UPI transactions at no cost, others may introduce nominal fees. By comprehending the workings of UPI charges and adopting measures to avoid them, users can economize on transaction expenses and enjoy the convenience of UPI transactions.