India’s 2nd largest private bank: HDFC Bank has decided to adopt an anti-digital stand, which is quite surprising and unexpected at the same time.
As per latest notifications received, HDFC Bank will now charge every person-to-person UPI transfer, and this will clearly put a big break on the expansion of UPI payment mode.
Till Rs 25,000 person to person transfer using UPI, HDFC Bank will charge Rs 3 plus taxes per transaction, and for transactions between Rs 25,001 and Rs 1,00,000, Rs 5 plus tax would be charged for every transaction.
Bank analysts are saying that this is a clearly offensive move against UPI protocol, initiated by a larger private bank. If other banks too follow this approach, then the whole purpose of digital cash and the cashless economy will fade.
These new changes would be effective from July 10th.
Note here, that HDFC Bank can only charge person-to-person transfers, and not person-to-merchant transfer, which right now forms the bulk of all UPI-based transactions.
Dilip Asbe, chief operating officer, NPCI clarified, “Person to Merchant (P2M) transactions in UPI will remain free to customers as per NPCI guidelines,”
Thankfully, India’s largest bank SBI has not revealed any such plans to charge UPI, which is quite encouraging. However, as per statements issued, it seems that they will also charge for UPI in the coming days.
Manju Agarwal, deputy managing director of corporate strategy and new business at SBI, said, “As of now we are not charging anything on UPI transfers but we could consider it in the coming 2-3 months.The revised service charges for online banking issued by the bank on 1 June does not include any charges on UPI transactions,”
UPI Expanding At Incredible Pace
The news of HDFC charging for UPI is quite surprising, mainly because the way UPI is expanding right now, becoming the top source for money transfers all over India.
Charging for UPI at this juncture would be a big mistake, and will negate all the hard work done to encourage citizens to opt for the cashless mode.
As per RBI data, 9.2 million transactions were done using UPI in the month of May, compared to 6.9 million in the month of April. This means, on an average, close to 3 lakh transactions are being done using UPI.
In March, this was just 2 lakh transactions per day.
In fact, UPI has beaten mobile wallets in terms of absolute growth witnessed per month, in the number of transactions and the volume. This is an important development, considering the volume of transactions is decreasing for debit/credit cards, at the same time.
While Uber has decided to integrate UPI mode into their platform and established payment processing companies are getting increasingly afraid of UPI protocol, why has HDFC Bank decided to levy a charge on UPI mode of transfers?
Is it a conspiracy to undermine UPI’s growth?
We will keep you updated, as we receive more information.
"UPI Transactions Expanding At Incredible Pace, But HDFC Bank Has Decided To Charge UPI Transactions!",