The National Payments Corporation of India (NPCI) has come out with a new circular on UPI charges, stating that all transactions will be subject to a nominal fee of 50 paise per transaction, payable by the payment service provider. Discover the key points of the circular, what they mean for UPI users, and how it aims to ensure the stability and growth of the UPI ecosystem.
Unified Payments Interface (UPI) has revolutionized digital payments in India since its launch in 2016, making it easier and faster to send and receive money using just a mobile phone number or virtual ID. The question of whether UPI payments should be free or not has been a point of debate among users, banks and payment service providers. On 29 March 2023, National Payments Corporation of India (NPCI), which manages UPI, issued a new circular which clarified the stance on UPI charges. In this blog post, we will discuss the key points of the circular and what they mean for UPI users.
What is the new NPCI circular on UPI charges?
NPCI’s new circular on UPI charges states that from April 1, 2023, all UPI transactions will be subject to a nominal fee of 50 paise per transaction, payable by the Payment Service Provider (PSP) that initiates the transaction. This means that UPI users will not have to pay any additional charges for using UPI, but PSPs can choose to charge their customers based on their business model and strategy. The circular also specifies that PSPs will have to pay a fee to NPCI on a monthly basis, based on the number of transactions processed by them.
Why NPCI introduced UPI fee?
NPCI introduced the UPI Fee to ensure the stability and growth of the UPI ecosystem, which has seen exponential growth over the years. UPI has become the most popular digital payment mode in India, with over 2 billion transactions processed every month. However, NPCI is facing financial constraints in managing and expanding the UPI infrastructure, and the new charges are expected to provide a steady revenue stream that can be reinvested in the UPI ecosystem.
What does this mean for UPI users?
For UPI users, the new charges mean that they can continue to use UPI without any additional charges, as the charges will be borne by the PSPs. However, some PSPs may choose to pass the charges on to their customers, either by increasing their service charges or through other means. UPI users should check with their PSP to understand their charge policies and any additional charges that may apply.
The new NPCI circular on UPI charges is a significant development aimed at ensuring the stability and growth of the UPI ecosystem. While UPI users will not be charged any additional charges, they may be indirectly affected by the charging policies of PSPs. It is important for UPI users to stay informed about any changes in UPI charges and choose PSPs that offer transparent and competitive pricing. Overall, UPI remains a convenient, fast and secure way to make digital payments in India, and the new charges are expected to help its continued growth and development.
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