Several other banks have held discussions with National Payments Corporation of India (NPCI), the umbrella payments body that manages UPI, to bring fees and cap the number of free monthly P2P transactions from one bank account, said sources.
Kotak Mahindra, in an email notification to some of its account holders, said it will charge Rs 2.50 for every transaction worth Rs 1,000 or less while the same would be Rs 5 for transactions of more than Rs 1,000. This will be applicable across all platforms, including Paytm, PhonePe and Google Pay, three players who now control 90% of the transactions.
A Kotak Mahindra Bank spokesperson defended the move, saying that 95% of its customers do an average of 5-10 UPI transactions per month. A PhonePe spokesperson said the company will not charge users for P2P transactions while Paytm and Google Pay did not immediately offer a comment.
While bigger consumer focused banks like SBI or HDFC Bank are yet to levy such fees, executives of new-age payments firms said charging P2P transactions goes against the idea of UPI and would have a negative impact on the digital payments ecosystem, driving consumers to opt for cash payments.