You might all be habitual of making payments through the UPI (Unified Payments Interface) application as it is quite easy to use and safe to store money. But, recently, NPCI (National Payments Corporation of India) has issued some notifications which spread the rumour that you, as a customer, need to pay the UPI transaction fee for each transaction.
However, it is clarified in various ways, but there is still a place for confusion. Let’s understand the recent notification in detail.
How many ways of making online transactions?
There are two ways you usually make payments to merchants or anyone. One is through your wallet, in which you transfer your money in an online wallet from your bank account to make a payment.
Another way is through bank-to-bank transactions, in which you directly pay your merchant or anyone from your bank account.
Who used to pay before?
To promote digital payments in the country, all digital transactions through UPI were free of cost for both customers and merchants. However, in a few transactions like mobile recharge, a fee was applicable by the applications like Paytm, PhonePe, etc., but such charges were not levied by the side of the government authorities like NPCI.
Afterwards, it is becoming difficult to recover the costs of making transactions smooth as every department has its own expenses like salary to employees, electricity, premises, etc. NPCI decided to charge a fee through which they can recover some costs from the transaction happening in the country and abroad.
Who is going to pay the fee now?
There are mainly three case scenarios of a transaction when you make any payment. Let’s understand each perspective and who is going to pay the charge in each case.
Bank to bank UPI transaction
In this case, whether you are a merchant or a customer, no fees will be levied on both of you. It will be applicable in the case of an amount cap of ₹2,000, which means bank-to-bank transactions will be irrespective of among as well as before.
Wallet payment is less than ₹2,000
If you are a consumer, you must pay a merchant ₹1,800. Now you have two options for making payment, either bank-to-bank UPI transaction or through an online wallet. In the present case, you, as a customer, and the merchant, both don’t have to pay a fee irrespective of the mode of payment as the amount of transaction through wallet payment is less than ₹2,000.
Wallet payment is more than ₹2,000
Suppose you went shopping and the bill is ₹3,500. Now again, you have two options: bank UPI transaction or wallet payment. If you choose to pay through your wallet, you need to pay charges ranging from 0.50% to 1.1%, depending on the type of services you are availing through wallet payment. However, if you choose to pay through the bank, as always, it will be free of cost.
Earlier, you might be freely choosing any option to pay, whether it is from a wallet or bank-to-bank UPI. But, from now onwards, you need to pay attention to save money on transactions you do while shopping or availing of any online services.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com