The growing popularity of Unified Payments Interface (UPI) has been eating away the ‘extra income’ of banks. Banks are losing revenue to UPI at several fronts like IMPS charges, doorstep banking, bank visit charges, cheque book charges, ATM usage charges and so on. The recent introduction of delegated payment facility at UPI has given further blow to banks’ income. The world of digital transaction is widening and so is the footprint of UPI. Banks are bound to face the heat.
IMPS vs UPI vs UPI Lite: The world of digital payment is evolving with new features being added every now and then. Recent introduction of UPI Lite and Delegated UPI payment system has given wings to this UPI.
Do you know that UPI Lite is a remarkable innovation in terms of charges? Whenever you make a payment through UPI, for you its free. But for the shopkeeper who is receiving payment has to pay some charges to the bank. If this amount is less than Rs. 2000, he has not to pay anything. In case of UPI Lite, the amount is well below Rs 2000 and therefore it is free of charge at both the ends. If you see your vendor giving some discount for using UPI Lite, he is just waiving the charges he had to pay with normal UPI. How are banks losing? The banking alternative of UPI is IMPS. IMPS is chargeable to the extent of Rs 15 per transaction. For IMPS of Rs. 1001, you will have to pay Rs 1.50. UPI transaction is free of charge for all the customers. You may imagine the quantum of loss to banks due to 14435 million UPI transaction per month.
The increase in daily transaction limit of UPI: Generally, UPI has a daily limit of Rs 1 lakh. In some special cases, the UPI limit is set at Rs 5 lakh per day. What are these special cases? Payment to hospitals and healthcare services, Education fees and Tax payments have been classified as special services for UPI payments. In case of hospital and education fees, the merchant (hospital and college/university) should be verified one. In all such cases, the banks lose Rs 15 per transaction towards IMPS charges.
Charges related to Doorstep banking, visit of banking premises, issue of cheque book, ATM withdrawals: You must be surprised to know that banks have been levying certain charges for visit to their premises. Growing popularity of UPI has reduced the use of such visits, need of doorstep banking and usage of cheque book. Decreasing volume of cash payment has reduced visit to ATM parlors. This has in turn reduced ATM based revenue of banks.
Use of UPI outside India: International wing of National Payments Corporation of India (NPCI) has launched UPI in several countries including Bhutan, United Arab Emirates (UAE), Malaysia, Singapore, Nepal, Oman, Qatar, Russia, France, Mauritius and Sri Lanka. The number of UPI using countries is increasing day by day. This is adversely impacting the revenue generated from the usage of International Debit Card, Gift Card, Prepaid Card, Forex Travel Cards etc. In a recent deliberation, the Reserve Bank of India (RBI) Governor, Shakti Kanta Das has said that UPI may be used for cross border transactions as well. This will further give a jolt to banking system in terms of revenue generation.
The ever-evolving field of digital payment system is not only easing the financial transaction for common man, but also pushing the financial system laggards against the wall and stripping them if easy money.
