UPI a Digital Public Good, No Charges in Consideration: Finance Ministry

The Finance Ministry has clarified that the United Payments Interface (UPI) is a digital public good and that the government has no plans to charge for it.

This statement allays concerns raised by the RBI’s discussion paper on payment system charges, which suggested that UPI payments might be subject to a tiered charge based on various amount brackets.

Currently, there are no fees associated with UPI transactions.

“UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means.” According to a tweet from the Finance Ministry.

According to an RBI discussion paper released earlier this month, UPI, as a fund transfer system, is similar to IMPS, and thus charges in UPI for fund transfer transactions should be similar to charges in IMPS.

“The Govt had provided financial support for Digital Payment ecosystem last year and has announced the same this year as well to encourage further adoption of Digital Payments and promotion of payment platforms that are economical and user-friendly.” another post stated.

With effect from January 1, 2020, the government has mandated a zero-cost framework for UPI transactions. This means that UPI charges are nil for both users and merchants.

UPI was launched in 2016 with 21 participating banks. The payments interface gained traction after a slow start.

The RBI’s discussion paper solicited feedback on payment systems such as NEFT, IMPS, RTGS, UPI, credit and debit cards, and PPIs.

RuPay cards and UPI are becoming increasingly popular. Nonetheless, these facilities are subsidized by the government. In the 2021-22 Budget, it allocated Rs 1,500 crore to compensate for the loss of merchant discount rates (MDRs), or charges paid by a merchant to banks and payment service providers for each transaction.

According to NPCI data, nearly Rs 628.84 crore in transactions worth Rs 10.63 trillion took place through UPI in July.

Finance Minister Nirmala Sitharaman stated in this year’s Budget that the government will continue to support digital transactions. ” The previous Budget’s financial support for the digital payment ecosystem will be maintained in 2022-23. This will encourage more people to use digital payments. There will also be an emphasis on promoting the use of cost-effective and user-friendly payment platforms “ She stated.