NPCI announces 1.1% fee on UPI transactions via wallets, other payment modes remain free

As digital payments become more popular, the National Payments Corporation of India (NPCI) has announced that UPI transactions via wallet will attract a fee of 1.1%, while other payments will remain free. This move is aimed at encouraging users to make direct UPI payments rather than using wallets, which often have higher transaction fees. In this article, we will explore the implications of this announcement and what it means for digital payments in India.

What is UPI?

Unified Payments Interface (UPI) is a real-time payment system developed by NPCI, which facilitates inter-bank transactions by instantly transferring funds between two bank accounts on a mobile platform. UPI has become one of the most popular digital payment systems in India, with over 3 billion transactions in August 2021 alone.

Why has NPCI introduced a fee on UPI transactions via wallets?

The NPCI’s decision to introduce a fee on UPI transactions via wallets is aimed at encouraging users to make direct UPI payments rather than using wallets. Wallets often charge higher transaction fees than UPI, which makes direct UPI payments more cost-effective for users. By encouraging users to make direct UPI payments, the NPCI hopes to increase the adoption of UPI as the preferred mode of digital payment in India.

What does this mean for digital payments in India?

This announcement by NPCI is a significant step towards making UPI the preferred mode of digital payment in India. With the introduction of a fee on UPI transactions via wallets, users will have a greater incentive to make direct UPI payments. This move is likely to increase the adoption of UPI and reduce the dependence on wallets.

The NPCI’s decision to keep other payments free is also a significant development, as it ensures that users are not deterred from making digital payments due to transaction fees. This move is likely to boost the overall adoption of digital payments in India.

Conclusion:

The NPCI’s decision to introduce a fee on UPI transactions via wallets is a significant step towards making UPI the preferred mode of digital payment in India. With the introduction of a fee, users will have a greater incentive to make direct UPI payments, which is likely to increase the adoption of UPI and reduce the dependence on wallets. This move is also likely to boost the overall adoption of digital payments in India.