The Truth About UPI Charges
Let's clear the biggest point of confusion first: for the average user, UPI payments remain free. You will not be charged for sending money to friends or family (person-to-person) or for making most of your daily payments to merchants. The government
and the National Payments Corporation of India (NPCI) have repeatedly clarified that customers will not bear the cost of the new charges. The changes, which take effect from October 15, introduce a Merchant Discount Rate (MDR) for certain transactions, but this is a fee paid by the merchant, not the customer. Most everyday transactions, such as paying for groceries, tea, or auto rides, will not be affected at all, as the new framework only applies to specific payments over ₹2,000.
Which Transactions Attract a Fee?
The new charge is a 0.4% MDR on person-to-merchant (P2M) transactions exceeding ₹2,000. Crucially, this fee is not on all UPI payments. It specifically targets transactions made via Prepaid Payment Instruments (PPIs), such as digital wallets. Think of paying a large merchant from your Paytm or PhonePe wallet balance, not directly from your bank account. Normal bank-to-bank UPI transfers are exempt. The fee is capped at ₹300 for transactions of ₹75,000 or more. This structure is designed to create a sustainable revenue model for the payment ecosystem, which processes massive volumes, while ensuring that an estimated 96% of merchant transactions remain free of this charge. Small merchants are also protected under a zero-MDR framework.
SBI's New ATM Rules Explained
The second major change this October affects State Bank of India (SBI) customers. Starting October 1, the rules for free ATM transactions are being revised for specific account types. The most significant change is for SBI Salary Package Account holders. For this group, the number of free transactions at other banks' ATMs is being reduced from 10 per month to just five. This limit of five transactions includes both financial (cash withdrawals) and non-financial (balance enquiry, mini statement) transactions. It is important to note that for these salary accounts, the number of free transactions at SBI's own ATMs remains unchanged and can even be unlimited depending on the specific account variant.
Revised Limits for BSBD Accounts
Another specific group of SBI customers impacted are those with Basic Savings Bank Deposit (BSBD) accounts. From October 1, these account holders will continue to receive four free cash withdrawals per month. However, any cash withdrawal beyond this fourth transaction will incur a charge of ₹15 plus GST. This count of four free withdrawals includes cash taken out from SBI ATMs, other bank ATMs, and even branch withdrawals. Digital transactions for BSBD account holders, however, will continue to be free and unlimited. For regular savings accounts that are not part of the salary package or BSBD schemes, the existing rules largely remain the same, typically allowing five free transactions at other banks' ATMs.
How to Avoid Extra Bank Charges
Once the free transaction limit is crossed, the charges can add up. For SBI Salary Package account holders using other banks' ATMs beyond their five free transactions, a cash withdrawal will cost ₹23 plus GST, while a non-financial transaction will cost ₹11 plus GST. To avoid these fees, the solution is simple: awareness and planning. SBI customers should prioritise using SBI's own ATM network, where they have a higher number of free transactions. It's also wise to track your monthly transaction count. Using SBI's digital platforms like the YONO app for services like balance checks and statement requests can help you preserve your free ATM transaction quota for when you actually need to withdraw cash.
