To further boost digital payments following the demonetization of Rs 500 and Rs 1,000 notes, the government has asked public sector banks to not to charge fees for transactions on the Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) above the rates charged for National Electronic Funds Transfer (NEFT). This will apply till March 31, 2017. The government also added that service tax will be charged. To give an idea of how much public sector banks charge for NEFT, here is State Bank of India's charges: Rs 2 for transfers below Rs 10,000. Rs 4 for for transfers above Rs 10,000 and below Rs 1 lakh Rs 12 for transfers between Rs 1 lakh and Rs 2 lakh Rs 20 for transfers above Rs 2 lakh In addition, for Unstructured Supplementary Service Data (USSD) transactions above Rs 1000, a further discount of fifty paise on these rates shall apply. Note that the banks can charge merchant accounts differently rather than P2P payments. For merchants, UPI has capped the fees to merchants to the MDR (~0.75% per transaction). NPCI charges 50 paisa for IMPS transactions and it has waived that right now for UPI, A.P. Hota, CEO of National Payments Corporation of India told MediaNama in an earlier interview. Note that the Reserve Bank of India (RBI) had issued a notification slashing charges for UPI and IMPS earlier this week. It also reduced bank interchange fee for merchants, known as the merchant discount rate (MDR), for debit cards. - For transactions…
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