The National Payments Corporation of India (NPCI), on march 28, 2023 has declared that all Unified Payments Interface or UPI transactions which is over Rs. 2,000 shall be liable to get charged of a fee of 1% on the payments. This process is decided to start from April 1, 2023. This decision was taken by NPCI in order to make promotion of digital payments modes and encourage more individuals or businesses to switch to UPI as a digital mode of payment.
The announcement has created a general clutter among the public as well as the business community. With UPI being one of the most popular payment modes in India, the decision to impose an additional fee on transactions above Rs. 2,000 is expected to have a significant impact on the budget of consumers and businesses.
The NPCI authorities clearly mentioned that the new charges will only be borned by the customers and not by merchants. if the transactions are initiated by customers and not to those initiated by merchants, it stay cancelled. Also, it was told that the charges will be borne by the customer and not by the merchants. To make it clear, they implied that merchants will not have to pay any additional fees for UPI transactions above Rs. 2,000 but the individuals or public.
While this decision may come as a genuine shock to many, it is essential to note that UPI transactions under Rs. 2,000 will remain as continued free of charge. UPI transactions has become a vital asset in business transaction as well as in individuals’ general transactiosns. Even, the 1% fee is still considered as lower than the charges imposed by other payment modes, such as credit and debit cards.
To wrap up, this step by NPCI in imposing a specific tax on the UPI amount can promote the wider adoption of UPI as a singular mode of payment and is aimed at generating additional revenue for the organization. With the growth of the digital economy in India, it is inevitable that UPI transactions will likely to be continued and will become more widespread, making it an essential part of India’s payment infrastructure.