How UPI has turned from a hot property to a complex maze
A deep dive into the costs and conflicts of India’s favourite digital payments system.
Why read this story?
Editor's note: The Unified Payments Interface, or UPI, has been a runaway success. What started as a small experiment by the National Payments Corporation of India has in four years become the most used digital payments system by volume of transactions. At a time when NPCI is preparing to take its immensely popular payments product global, banks and fintech companies have been grousing about how it’s impossible to make UPI as a payment mode sustainable. Starting January this year, they were no longer allowed to charge merchants a fee on payments received, by government order. Banks have also been expected not to charge individuals for sending money to each other using UPI. Things came to a head when some large banks decided to start charging a standard fee for person-to-person transactions. HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank had all begun to levy a fee on every transfer after the first 20 UPI transactions a month. Within a week or so, in late August, the Central Board of Direct Taxes wrote to the banks, ordering them “to refund the …
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