Kotak Mahindra Bank (Kotak) told its customers last week that it will charge customers for UPI transactions starting first of May, this year.
The bank said every month, for each Kotak Bank account, the first 30 UPI fund transfers will be free, after which a charge will be levied on all fund transfers from the bank account. This will be applicable across all platforms, including Paytm, PhonePe, Google Pay or Truecaller Pay among others.
The bank will charge Rs 2.50 per transaction for an amount value below or equal to Rs 1,000, and Rs 5 per transaction will be levied for a payment value above Rs 1,000.
According to the bank, merchant payments, online shopping, bill payments, etc., done via UPI will continue to be free and will not be liable to the above terms from Kotak.
The public statement also said that in the future, Kotak Bank has the right to revise the above- mentioned charges, which shall be communicated to customers 30 days prior to the change.
YourStory reviewed the document sent to the customers. In a statement, Rohit Rao, Chief Communication Officer, Kotak Mahindra Group, said,
“We continue to promote UPI as a convenient way to pay. More than 95 percent of our customers do an average of 5-10 UPI transactions per month. While we continue to offer the first 30 P2P UPI transactions per month at no cost, charges are being introduced only for all subsequent UPI P2P fund transfers, beyond the monthly 30 free transactions. This is intended to prevent abuse of the UPI system and will not impact genuine customers. Receiving money through UPI as well as all merchant transactions continue to be free.”
Meanwhile, industry sources state that few other private banks are also thinking about levying charges on UPI fund transfers, and are expected to send a public notice to customers stating the same.
Earlier today, data released by Indian retail payments organisation, National Payments Corporation of India (NPCI), revealed that the total UPI (Unified Payments Interface) transactions in the country, reached 799.54 million in March 2019.
Further, the total value of these transactions stood at Rs 1.33 lakh crore, almost a 24 percent growth from the month of February 2019, and 21 percent growth from January 2019. In January, Rs 1.10 lakh crore was transacted through UPI, and February saw transactions worth Rs 1.07 lakh crore.
With banks planning to monetise on fund transfers, it will be interesting to see how UPI’s growth will be affected.
(This article has been updated to include a response from the official spokesperson of Kotak Mahindra Bank.)
Tarush is driven towards delivering unbiased and accurate reportage while engaging with as many mediums as possible to narrate a fresh perspective. Working for the past few years in the digital space with YourStory, he has covered the Indian technology ecosystem extensively, focusing on new age Fintech companies, while building strong connects within the industry.