Charges on UPI payments: Why you should not worry

Last week there were multiple reports claiming that the government of India would start levying additional charges on UPI payments. The thought of UPI payments being charged didn’t seemingly go down well but the government of India has now clarified its stance on the whole matter.
In a tweet, the Ministry of Finance has made it clear that the government will not be imposing any charges for using UPI services.
“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 finance ministry said in a tweet.

UPI payment charges: What prompted the whole issue

UPI transactions in India have seen a tremendous growth. According to a report by PTI, in Q1 2022, in terms of volume there were over 14.55 billion UPI transactions. In terms of value, UPI transactions stood at whopping Rs 26.19 trillion. There has been a 99% increase in terms of volume and 90% in value compared to 2021.
The news of UPI payments being charged came in when the RBI released a discussion paper where it sought feedback from stakeholders on the idea of a fee structure for various digital payments, which included RBI. In the discussion paper, RBI had categorically stated, “RBI has not issued instructions regarding charges for UPI transactions. The Government has mandated a zero-charge framework for UPI transactions with effect from January 1, 2020 . This means that charges in UPI are nil for users and merchants alike. Keeping in view that the intent of this discussion paper is to elicit general feedback, a few questions on what approach should be adopted, have been included.”
The finance ministry in its tweet further made it clear that it will continue to encourage adoption of digital payments. “The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly,” read the tweet.

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