UPI transactions more expensive: going to implement extra charges

The practice of Unified Payment Interface (UPI transaction) in India is so much that people are using UPI apps even to make small payments. Whether it is a large transaction or a large money transfer, UPI is the first choice of people, because it is free of charge, very easy and fast.

Due to all these advantages India is emerging as the world leader in UPI transactions. However, the use of this payment interface may decrease in the future. This was revealed in a survey. Unified Payments Interface (UPI) transaction volume hit an all-time high of Rs 1,800 crore in February.

Financial technology (FinTech) companies raised the issue of implementation of Merchant Discount Rate (MDR) for UPI transactions during a meeting with Union Finance Minister Nirmala Sitharaman last week. MDR for UPI payments has been a long-standing demand from the fintech industry, which says it does not generate revenue from such transactions. MDR is the rate charged to merchants for payment processing services for various payment instruments.

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Why is UPI usage declining?:

Many users will stop using the popular mobile payment system UPI if it charges transaction fees. This matter has come to light in the online survey of LocalCircles. 73 percent of people surveyed indicated that they would stop using UPI if charged on UPI payments.

A survey conducted by LocalCircles revealed that 37% or more people have experienced one or more transaction charges on their UPI payments in the last year. After speaking to 34,000 people, a LocalCircles survey was released. More than 34,000 people from more than 364 districts have expressed their opinion in the survey, a LocalCircles said on Sunday.

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67 percent of them are male and 33 percent are female. The survey revealed that nearly 50 percent of UPI users make more than 10 transactions every month through this payment method. The survey found that only 23 percent of UPI users are willing to pay transaction fees on payments. In August 2022, the RBI released a discussion paper proposing a tiered structure fee on UPI payments based on different amount bands.

After the RBI’s discussion paper, the finance ministry clarified that there is no proposal to levy charges on UPI transactions. However, consumers across India are reporting some platforms charging convenience or transaction fees for UPI payments.

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20 charged by IRCTC for UPI payments. One of the most common examples often cited by consumers is convenience fees. When asked about the frequency of UPI usage, the survey found that one in two UPI users conducts more than 10 transactions per month.