HDFC Bank, the second-largest private sector lender, will start charging customers for outgoing Unified Payments Interface (UPI) transactions. In an email to customers, the bank said that it will be charging Rs 3 plus taxes for outward transactions from Rs 1 to Rs 25,000. For outwards transactions above Rs 25,000 to Rs 1 lakh, HDFC Bank will be charging Rs 5 plus taxes. The new charges will be applicable from July 10, 2017.

Note that when the UPI was launched, the National Payments Corporation of India said the person-to-person payments would be free, while for person-to-merchant transactions banks could charge merchants an interchange fee similar to the MDR. But this doesn’t seem to be the case now.

Banks are now allowed to charge customers at their discretion for the UPI, according to Dilip Asbe, chief operating officer at NPCI.

“We have provided UPI platform to banks and other institutions for their customers. So far, no bank is charging for UPI transactions but at the same time it is at their discretion to levy a reasonable fee towards Person to Person (P2P) transactions for UPI and IMPS. However, Person to Merchant (P2M) transactions in UPI will remain free to customers as per NPCI guidelines,” Asbe said in an email to MediaNama.

However, that still does not clear up some questions.

– Will HDFC Bank’s customers who choose to use another bank’s UPI application be charged?

– What does HDFC Bank consider an outward transaction? Do the charges also apply to collect requests as well?

– What is the bank’s rationale for charging customers for UPI transactions when other banks are not charging?

MediaNama has written to HDFC Bank and will update once we hear from them.

What happens to Chillr?

Note that payments application Chillr had started UPI payments through HDFC Bank in April. It is unclear if HDFC Bank will be charging for transactions on Chillr as well. Chillr automatically makes a virtual payment address from HDFC Bank for customers when they sign up for the service. Note that the bank is yet to roll out the UPI on its PayZapp wallet.