The National Payments Corporation of India (NPCI) is planning to meet lenders to discuss charges on peer-to-peer transactions on the Unified Payments Interface (UPI) platform, a senior official told BloombergQuint on condition of anonymity.
The call for a meeting is in response to private sector lender HDFC Bank Ltd.'s decision to levy charges on transactions made using UPI. Over the weekend, the lender sent out an email to all its customers stating that it will be charging customers Rs 3 plus taxes on transactions up to Rs 25,000, starting July 10. HDFC Bank will also levy a charge of Rs 5 plus taxes on transactions ranging between RS 25,000 and Rs 1 lakh.
On Wednesday, the Economic Times had first reported that NPCI might discourage banks from charging such transactions.
“So far, no bank is charging for UPI transactions, but at the same time it is at their discretion to levy a reasonable fee towards person-to-person (P2P) transactions for UPI and IMPS (immediate payment service),” Dilip Asbe, chief operating officer, NPCI, said in an emailed statement to BloombergQuint on Wednesday.
According to the senior official quoted above, the organisation that manages retail payments is worried that charges might end up stopping customers from adopting UPI as a quick and easy method of transacting between themselves.
Data available with the Reserve Bank of India (RBI) showed that customers made 92 lakh transactions worth Rs 2,770 crore in the month of May. The average value of a single transaction at the moment is Rs 2,700, according to the official quoted above. This was higher than 69 lakh transactions worth Rs 2,200 crore reported in April.
Unless more customers begin using UPI as a preferred mode of transaction and the average ticket size comes down further, charging transactions could negatively impact UPI adoption, the senior official quoted above said.
While customers might be charged for P2P transactions, they will face no charges on peer to merchant transactions, the NPCI official confirmed.
UPI, which was introduced in April 2016 as a revolutionary payments platform, had seen very low adoption rates among customers till November, when the government removed Rs 500 and Rs 1,000 currency notes from circulation as part of its demonetisation move.
A paucity of physical cash led to customers adopting more electronic modes of transactions, including UPI. According to the RBI data, 3 lakh transactions worth Rs 90 crore were reported on UPI in November. This rose rapidly as customers became more comfortable with the medium.
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