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The Finance Ministry said the United Payments Interface (UPI) is a digital public good, and there is no consideration in the government to levy any charges on this.
Key takeaway
- Currently, there are no charges levied on transactions done through UPI.
- The clarification from the Ministry of Finance comes days after the Reserve Bank of India (RBI) sought public feedback on UPI payments and charges.
- According to the RBI, fund transfers made through UPI are equivalent to those made through IMPS (Instant Payment Service), so theoretically, UPI should charge the same fee as IMPS.
The Unified Payments Interface (UPI)
- It is an immediate, real-time payment system that allows users to transfer money between various bank accounts in real-time without giving account information to the other party.
- It is an advanced version of the Immediate Payment Service (IMPS).
- UPI is a product of the National Payments Corporation of India (NPCI).
- The top UPI apps include PhonePe, Paytm, Google Pay, Amazon Pay, and BHIM.
Immediate Payment Service (IMPS)
- It is a real-time electronic fund transfer method through which money is credited immediately to the payee/beneficiary account.
- Through IMPS, inter-bank transfers can be initiated through multiple channels such as mobile banking, internet banking, SMS, ATMs, etc.
- Unlike other types of fund transfer methods, the main advantage of IMPS over NEFT and RTGS is that the service is available round the clock.
- The IMPS service is managed by the National Payments Corporation of India (NPCI) and comes under the purview of the Reserve Bank of India (RBI).
- To make an IMPS transfer through net banking, the remitter will have to register the beneficiary by providing all the details such as bank account number, IFSC code, name of the bank, the bank branch, etc.
- Every bank has a different transaction charge for an IMPS transfer, and this fee only depends on the amount that is sent.
Difference between IMPS and UPI
| Immediate Payment Service | The Unified Payments Interface |
| To make an IMPS transfer, one needs to have the particular app of the debiting account. | It gives a flexible option of linking to multiple bank accounts from the same app. |
| Using the IMPS method, you can transfer money abroad. | It does not have the option of transferring money abroad. |
| IMPS transactions require a smartphone along with the relevant app to make payment transfers. | UPI transactions are available on USSD-enabled mobiles. |
| It does not provide the option of requesting money. | UPI provides the unique option of requesting money collection. |
| IMPS transactions happen with an OTP (one-time-password) authentication. | UPI payment authentication takes the form of an MPIN number. |
| IMPS comes with a lengthy beneficiary addition process. | A UPI payment solely requires the use of the payee’s VPA(virtual payment address) of the payee to initiate the payment. |
The National Payments Corporation of India (NPCI)
- It is an initiative taken by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) to operate the retail payments and settlement systems in India.
- This organisation was founded in the year 2008 under the Payment and Settlement Systems Act, 2007.
- NPCI is a statutory body. It has been incorporated as a “not for profit” company under section 8 of the Companies Act 2013.
- Another major objective of NPCI was to facilitate an affordable payment system that could help the common people during financial inclusion.
- NPCI can operate the following products and services:
- National Financial Switch (NFS)
- Unified Payments Interface (UPI)
- Immediate Payment Service (IMPS)
- RuPay
- National Automated Clearing House (NACH)
- Aadhaar Enabled Payment System (AePS)
- e-KYC
- Cheque Truncation System
Content Source: The Hindu