According to a survey by LocalCircles, 70% – 75% of UPI users will stop using the UPI service if a transaction fee is added. The survey also states that only 23% of users are ready to pay a transaction fee whereas 73% of them will stop using UPI if a transaction fee is charged. Here’s more about the survery:-
- Half of UPI users engage in more than 10 transactions monthly.
- In August 2022, the RBI issued a discussion paper proposing a tiered fee system for UPI payments.
- Following the discussion paper by the RBI, the finance ministry said that there were no intentions to impose such fees.
In India, where people used to prefer cash, UPI digital transactions have become extremely popular. Now-a-days online money transfer scanners are available everywhere in the INDIA, from luxury boutiques to paan shops to small roadside stalls everywhere.
A recent report shows:-
- In January, the daily number of UPI transactions saw a notable rise, from 39.3 crore to 41.7 crore.
- UPI transactions in India hit a record high of Rs18.28 lakh crore in February 2024.
Current Scenario
- UPI is a widely used payment method accessed by mobile phone in India that allow real-time money transfers between personal accounts, banks, and merchant accounts.
- Prepaid Payment Instruments (PPIs), such as digital wallets (e.g., PhonePe, Paytm, Amazon Pay) that made these UPI transactions possible.
- Interchange fees are associated with UPI transactions made through PPIs. These fees cover processing, accepting, and authorizing transaction costs.
- The interchange fee charge is from 0.5% to 1.1% based on the type of service (e.g., fuel payments, post office, supermarkets, insurance).
- New guidelines introduced in 2024 impose an interchange fee of up to 1.1% on UPI transactions above Rs. 2,000 made through PPIs.
Impact on Users
Personal Transactions: Individuals making personal transactions using UPI are not charged any fees. UPI payments for personal transactions will remain free irrespective of amount.
Merchant Transactions: Merchants accepting payments above Rs. 2,000 using PPIs need to pay an interchange fee.
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