After November 8, 2016, many of us were suddenly pushed to explore digital modes of making payments even for the most basic of purchases like buying daily rations. While a lot of us have moved to electronic payments, not many are aware of the costs are attached with it.
Read on to find out about the various fees and charges of different types of electronic payment modes:
National Electronic Funds Transfer (NEFT)
NEFT is a payment system facilitating one-to-one funds transfers. One can access this service either by using Internet banking or by visiting the bank branch. (Not all bank branches are enabled with this service.)
Once you initiate the transfer, the money reaches beneficiary account within hours. There is no minimum or maximum amount, however, an individual bank may put restrictions on per transaction amount. This service does not come free of charge. The bank levies certain charges based on the amount being transferred.
NEFT charges of the country’s largest public sector lender, State Bank of India (SBI) are as follows:
ICICI Bank, one of the largest private sector banks, levies the following charges:
The above charges are applicable as per transaction basis and attract Goods and Services Tax (GST) of 18 per cent. Further this facility is not available 24X7.
Real Time Gross Settlement (RTGS)
This is another facility offered to transfer high-value amounts. In RTGS, the minimum amount that can be transferred is Rs 2 lakh.
Below are SBI’s charges of RTGS:
Below are ICICI Bank’s charges:
You can only transfer funds using RTGS between Monday and Saturday.
Immediate Payment Service (IMPS)
This facility allows the customer to transfer funds on a 24×7 basis and 365 days of the year. However, the maximum amount that be transferred is Rs 2 lakh. This facility is available only via Internet banking.
Charges of SBI are as follows:
Charges of ICICI Bank are as follows:
Mobile wallets gained traction during demonetisation. As the name suggest, mobile wallets allow you to pay using your smartphone through an app. However, one can transfer money or make payments, only if the sender and receiver are using the same mobile wallet.
It is a known fact that there are no charges while making payments or adding cash into wallets. But did you know that there are certain charges when money is transferred to your bank account from your mobile wallet.
For instance, Paytm charges a flat 3 per cent for transferring money from your wallet to your bank account. Similarly, Mobikwik charges 4 per cent of the transfer amount.
Unlike the usual bank, a payments bank offers limited services to its customers which are as per guidelines of the Reserve Bank of India (RBI). Airtel Payments Bank, Paytm Payments Bank are some examples.
Payments banks offer services like accepting deposits up to Rs 1 lakh per individual customer and issuance of ATM/debit cards (not credit cards). Payments banks are not allowed to offer loans. Unlike mobile wallets, they do offer interest on deposits. Airtel Payments Bank is offering interest of 7.25 per cent per annum, whereas Paytm Payments Bank offers 4 per cent a year.
Services offered by payments bank are not free. As per the Airtel Payments Bank website, there are no account opening or cash deposit charges but there is a fee on cash withdrawal of 0.65 per cent of the amount.
Similarly, transfer of funds within Airtel Payments Bank is free but for transfers to other banks comes at a cost of 0.5 per cent of the amount being transferred.
Unified Payments Interface (UPI)
UPI is an instant payments facility launched by the National Payments Corporation of India (NPCI). It allows the user to send and receive money using a virtual payment address (VPA) without entering additional banking information. Each bank provides its own UPI app. Even the government has its own app called BHIM.
As per Cashlessindia.gov.in, a website managed by the government to educate people about digital transactions, there is no charge for making payments using the UPI facility. However, if a payment is made from UPI to say a bank account using IMPS, NEFT or RTGS, then a bank may charge you for it. However, one needs to get in touch with the bank if they are charging for transferring money by using the UPI platform. One can transfer up to Rs 1 lakh per UPI transaction.
Unstructured Supplementary Service Data (USSD)/*99#
This is another facility offered by NPCI. It is a mobile based banking service that can be accessed by any mobile phone user (feature or smartphone). You can use this service works best in areas with zero internet connectivity as well. One can avail this facility by dialling *99# on their phone. A customer has to dial *99# and chose the service based on his requirement. The services offered include interbank accounts fund transfer, balance enquiry etc.
A nominal charge of Rs 0.50 per transaction is charged by the mobile operator. There are no charges on the transfer of funds. However, the maximum limit on fund transfer per customer is Rs 5,000 a day.
This is a biometric based payment solution which requires the user to remember his Aadhaar number at no additional costs.
Aadhaar Pay allows customers to make payments to merchants either via fingerprints or via Iris scan. To use the service you have to select your Aadhaar-linked bank account, enter your Aadhaar number, and provide your biometric thumb impression.
Although there are no transaction charges, a merchant may get charged based on the banks discretion.
You can use Aadhaar Pay to check your balance, transfer funds, deposit or withdraw funds etc at the banking correspondent. For this you will have to enter your Aadhaar number and verify it via biometric or iris scan. To transfer funds, you will have to enter not just your Aadhaar details but that of the beneficiary as well.
However, most banks are using this system to do e-KYC while opening of new bank account.
Credit cards/Debit cards
This is the most common method of making electronic payments. In our everyday lives, we swipe our cards to make bill payments, buy groceries, book travel tickets and so on.
On a debit card, there are usually two types of charges. One is the annual fees that a bank charges for issuing it to the customer. Two, is the convenience fees that are charged at the merchants outlets for swiping the card at a point-of-sale terminal.
There are also limits imposed on the number of transactions (financial or non-financial) that a customer is entitled to. If the customer breaches the limit, bank is liable to charge him. A customer is entitled to eight free monthly transactions (five at his home bank ATMs and three at non- home bank ATMs) in a metro city. Thereafter for every transaction, a bank charges Rs 20 per financial transaction and Rs 8.5 for non-financial transaction.
Credit cards come with higher fees and more limits compared to a debit card. If you do not use your credit card judiciously you can end up in a debt trap. Credit cards come with annual fees, renewal fees and convenience fees. Apart from that, if a person misses the due date to make a payment then he or she will be subjected to interest rate which varies bank to bank. Cash withdrawals from ATMs using credit card is also a costly affair. According to HDFC Bank’s website, transaction fees of 2.5 per cent, minimum being Rs 300, would be levied on the amount withdrawn. This amount will be added to the card holder’s bill.
What you should do
There are no free lunches in this world and everything comes with charges attached. Yes, digital payments are convenient and are gaining traction and although the fees may not seem like too much, over a period of time they can eat into your overall account balance.
So, it is always a good thing to know cost of the service that you are using, plan your method of making payments in the cost-effective manner. Read the terms and conditions carefully to avoid any surprises in the future.