Government Limits Charges on IMPS, UPI Electronic Fund Transfers

In order to encourage digital transactions, the Finance Ministry today asked PSU banks to restrict fees on payments through IMPS and UPI to the extent that is applicable for NEFT fund transfer of over Rs. 1,000.

As per RBI norms, NEFT transfers of up to Rs. 10,000 attract Rs. 2.5 fee. From Rs. 10,000-1 lakhs the fee is Rs. 5; on Rs. 1-2 lakhs it is Rs. 15, and beyond Rs. 2 lakhs it is Rs. 25.

Service tax is charged in addition to this. For Unstructured Supplementary Service Data (USSD) transactions above Rs. 1,000, the ministry said a further discount of 50 paise on these rates shall apply. USSD is mobile short code message and used mainly for banking services on feature phone.

The USSD fee is Rs. 1.50, which has been waived till December 30 2016.

(Also see: Over 70 Percent Rural Citizens Have Adopted E-Wallets, Says IT Ministry)

In order to further promote digital and card payments, the ministry has issued a direction in public interest to all Public Sector Banks, said an official statement.

In accordance with this "these banks shall not charge fees for transactions settled on Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above Rs. 1000, with service tax being charged at actuals", it said.

IMPS is an interbank electronic instant mobile money transfer service through mobile phones. The UPI app enables customers to make online as well as offline payment to merchants from their bank accounts, without typing card or net banking/wallet details and IFSC code.

This direction will apply for all transactions up to March 31 2017.

"For USSD transactions above Rs. 1,000, a further discount of fifty paise on these rates shall apply," it added. In order to promote digital transaction, Niti Aayog has announced two schemes - Lucky Grahak Yojana and Digi Dhan Vyapar Yojana', to be launched on December 25.

(Also see: New, Simpler USSD Version to Be Launched Soon)

The schemes will cover small transactions between Rs. 50 and Rs. 3,000. Transactions using RuPay, USSD, UPI and Aadhar Enabled Payment System (AEPS) will be covered under this scheme; payments made through credit cards and e-wallets would not be covered.

In line with the central government's objective of promotion of payments through cards and digital means over payments in cash, the Reserve Bank has recently rationalised customer charges for transactions up to Rs. 1,000 settled on IMPS, UPI and USSD from January 1-March 31 2017.

RBI has also rationalised the Merchant Discount Rate (MDR) for debit card transactions up to Rs. 2,000 for the 3-month period.