Pvt banks charging fee on more than 20 P2P UPI transfers in a month: Report

As people switch to online transactions to avoid visiting banks amid the coronavirus pandemic, all large private sector banks are charging for person-to-person payments using the Unified Payments Interface beyond 20 times a month. The charges range from Rs 2.5 to Rs 5, Times of India reported. 

According to reports, the use of UPI has been growing by 8 per cent month on month basis during the lockdown. The projections estimate UPI transaction to go up to Rs 160 crore in August as compared to 80 crore in April 2019. 

Defending the move, bankers said that the charges have been introduced in a bid to prevent frivolous transactions from putting a load on the system. It is to be noted that the government has said that the payments using UPI are to be free. 

The report was initially published by Ashish Das of IIT Bombay stating that the banks are interpreting the rules to suit them to conclude that while payments are free, transfers can be charged. 

The report further said UPI as a digital payments platform increases efficiency towards tax compliance, and provides overall convenience for public good. "With the government's vision of no direct or indirect charge on payments using UPI, an appropriate sharing of cost burden by the government and the RBI is called for (with UPI being the simplest alternative to cash in this era of mobile phones)," the report added.

While UPI is still in its infancy towards replacing cash, given its rapid progress and future potential, it deserves full support from the RBI, it said.

The report also added that just like RBI provisions for the cost of cash in their books of account, it should also provision for bearing the cost associated with managing the UPI infrastructure.

It further said while banks have to contribute their bit for the payment system, it does not mean that the government and the RBI do not have to share the cost burden in endeavour towards furthering the digital payment system of the country.