UPI Transaction charges are no longer free. Some of the banks started to charge after a fixed number of transaction. However, the government and NPCI has persuaded most of the banks to keep this service free. But it does not mean that UPI transaction would always remain free. The app developers, Banks and NPCI are incurring cost on UPI money transfer. Thus, in future more and more banks may charge for this mode of the fund transfer.
UPI Charges of Kotak Mahindra Bank
The Kotak Mahindra Bank is the only bank which charges or the UPI money transfer. These charges are introduced since 1st May 2019. Earlier it was free.
|First 30 transactions||Nil|
|Transactions up to ₹1,000||₹2.5|
|Transactions amount above ₹1,000||₹5.0|
- The first 30 transactions in a month would remain free.
- The subsequent transaction would be charged as per the given table.
- Merchant payments, online shopping, bill payments etc done via UPI will remain free.
- The UPI Transfer processed through the Kotak Mahindra Bank would be charged as per schedule. The UPI app may not be from the Kotak.
- KhaaliJeb and KotakPay use the Kotak Mahindra Bank for the UPI processing.
UPI Transaction Charges of SBI, Paytm, Phonepe etc
The good news is that UPI fund transfer is still free even after the 3 years of the launch. SBI, ICICI, HDFC, Paytm and other banks do not charge for this transaction. The banks are losing some money just to promote this way of fund transaction. You would be aware that these banks charge for the NEFT, IMPS and RTGS payments. The fund transfer charges can go up to ₹50. However, except UPI all other methods of fund transfer can be used in PC as well. Whereas UPI is only available on your phone. UPI fund transfer has some more limitations.
To know more about the fund transfer charges of other payment methods you can read my another post.
Cost of UPI Transaction in Future
Yes! it is right that UPI is free now. But it does not mean that UPI would be free in future as well. As there is no in-principle decision to keep it free forever. However, NPCI would try to keep it low cost. So, don’t worry and adopt UPI payments as soon as possible.
The UPI fund transfer goes through the 3 parties.
- UPI apps which may or may not be developed by the banks.
- Banks which sends or receives money from their accounts.
- NPCI which provides the fund transfer switch or platform.
All these entities incur cost on UPI Payments. Thus all of them can charge for their services. Hence, there might be a charge in the future.
- The apps try to recover their cost by promoting other services.
- Banks are processing the actual fund transfer. It is an automatic process and banks spend on technology. But as of now, they are bearing this cost.
- NPCI is charging for the UPI platform. This can go up to ₹0.50 per transaction.
UPI Charges by NPCI
|Upto ₹1,000||10 paise|
|Above ₹1,000||50 paise|
|Incentive by the Apps||10 paise|
|Merchant Transaction||10 paise + 0.04%|
You can see that NPCI charge a nominal amount for the UPI transaction. It is only 10 paise per transaction up to ₹1000. Beyond this, NPCI is charging only 50 paise. Merchant Transaction charge is also very low compared to debit and credit cards.
Recommended: No MDR of UPI and Rupay – New Rules of 2020
Also Read: IMPS Fund Transfer and Charges
UPI Charge Vs Paytm Wallet
As of now UPI and Paytm both don’t ask any transaction charge for money transfer. But we have to understand the cost structure of both these payment mechanisms. The Paytm and UPI transfer go through these steps.
UPI Transfer Steps
- You use UPI app and give the mandate to transfer an amount to a VPA or account.
- The NPCI acts as the switch and identifies the correct account. The UPI charges very negligible amount ₹0.5 for this switch. As of now, it does not charge anything.
- The money gets transferred directly to the account. The money goes directly from one account to another. Since it is an interbank transfer, UPI Enabled banks do not charge with each other.
Useful Post – Paytm Vs Phonpe? Which is a Better Mobile App
Paytm Wallet Transfer Steps
- Paytm wallets get the deposit from the bank account. The banks charge 1-2% for this transaction. But Paytm doesn’t charge it to you. It bears this cost.
- You transfer money from one Paytm wallet to another. The Paytm doesn’t charge for this as well.
- The receiver of fund transfers money back to his account. The Paytm doesn’t charge for this, however, It charges if the amount goes beyond ₹ 10,000. It is 1% of the value.
You can see that Paytm bears the fees charged by the bank. It is not transferred to you because Paytm is spending on customer acquisition. But once the Paytm ends promotion, the money transfer into a Paytm wallet can be charged. However, Paytm would try to compensate this expense through selling products on its platform. Also, for a big amount Paytm is too costly.
Thus, I advise the UPI app instead of Paytm because it is based on very simple and cheap infrastructure. Moreover, UPI doesn’t try to sell you and works across the banks without any intermediary. In fact UPI has many benefits over existing payment systems. There are many UPI apps such as BHIM, SBI UPI, ICICI UPI, HDFC UPI, Axis UPI etc. You can choose any from the best UPI apps. There is too much flexibility.