In a move to encourage digital transactions, the Finance Ministry on Wednesday 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 lakh the fee is Rs 5; on Rs 1-2 lakh it is Rs 15, and beyond Rs 2 lakh it is Rs 25. Service tax is charged in addition to this, reports PTI.
Discount on USSD transactions
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 a feature phone, reports PTI.The USSD fee is Rs 1.50, which has been waived till December 30, 2016.
No charge fees for IMPS, UPI and NEFT transactions
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.
What is IMPS?
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.
Pay digital and get cashback
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. The schemes will cover small transactions between Rs 50 and Rs 3,000. As part of this daily, weekly and mega awards worth Rs 340 crore for consumers and merchants on small digital payments beginning Christmas Day will be given.
Not applicable for card and wallet transactions
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.
MDR for card payments
In line with the central government's objective of promotion of payments through cards and digital means overpayments in cash, the Reserve Bank has recently rationalized customer charges for transactions up to Rs 1,000 settled on IMPS, UPI and USSD from January 1-March 31, 2017. RBI has also rationalized the Merchant Discount Rate (MDR) for debit card transactions up to Rs 2,000 for the 3-month period, reports PTI.