InvestorQ : In your opinion, should UPI transfer be priced or should be it remain free of cost?
Arti Chavan made post

In your opinion, should UPI transfer be priced or should be it remain free of cost?

Rutuja Nigam answered.
2 months ago

Since UPI has become so popular, let me first outline why UPI became so popular in India. Actually, there were two reasons why UPI became so amazingly popular in India. Firstly, UPI did not entail any cost for transferring money. That was perhaps the most important reason for the UPI becoming so popular even among people transferring small sums of money anywhere in India. . Secondly, the UPI transactions are extremely simple and do not entail registering account number, name and IFSC code for money transfers.

Actually, an important reason other than cost is simplicity. UPI transfers are done on a simple @ separated id, which is unique to each bank. Each UPI id like (XYZ@ICICIBANK) is mapped to a particular bank account and is uniquely identified by the customer as the prefix and the banker as the suffix. The UPI transfer is done almost instantaneously to the other party, making it akin to IMPs, without the data hassles. It is this simplicity and cost-free nature of UPI that made UPI so popular among the people.

Now let me tell you why it should be just left alone. You don’t have to kill such a beautiful concept just to monetize it. There are other ways to monetize like leveraging the huge database of customers using it for cross selling. RBI may charge for UPI transactions only above a threshold, but that would make it still to discretionary. UPI is not just about transferring funds but about moving away from cash and enabling financial inclusion. There is no reason to kill the goose that lays the golden eggs, with a small charge.