Using a few taps on smartphone screens and a QR code, digital payments have been simplified in India to serve 40 per cent of the population. UPI-based transactions, which are just like paying cash but in virtual form, accounted for more than 4,500 crore e-payments in FY22.
This is why news suggesting that UPI transactions will attract an additional charge, triggered concerns among citizens.
UPI still free, no reason to panic
But a day after the reports, the national payments corporation of India (NPCI) has clarified that UPI is still free for common consumers.
The 1.1 per cent interchange charge is only applicable on prepaid payment instrument merchant transactions.
The PPI wallets were recently allowed to become a part of the UPI ecosystem.
This means that account to account transfer and payments will remain free for users and merchants.
They can also use any bank account, RuPay credit cards and PPI wallets on UPI smartphone apps.
Jumping the gun?
The new levy was announced for PPI merchant payments worth more than Rs 2,000, but was misinterpreted as a charge for UPI.
With high penetration among the Indian population and now enabled for overseas payments, UPI is an essential part of life in India.
This is why Indians have been spooked about the prospect of charged UPI transactions for some time.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)