UPI & USSD: 2 Cheapest Money Transfer Options in India

Post demonetization, there has been a tremendous increase in usage of digital payments in the market. This gave rise to new payment options in addition to the existing ones. However this resulted in confusion for the Indian consumer who were largely dependent on cash transaction in pre-demonetisation era. Apart from cash, the other widely used money transfer options were NEFT, RTGS, IMPS, UPI, e-wallets such as Paytm, Freecharge and others.

So let’s understand which money transfer option should be used when the amount is small or big. We’ll consider two examples – transfer of Rs. 10, 000 and Rs. 2, 00, 000 (2 Lacs).

Irrespective of the amount to be transferred, a person should keep three things in mind before finalizing the option.

These are as follows:

  1. Time – Required to transfer the money i.e. speed.
  2. Amount – The quantum of money to be transferred.
  3. Cost – The cost incurred in carrying out the transaction.

For transferring Rs. 10, 000; UPI app is the best option as it does not involve any cost and money transfer happens instantly. Although mobile wallets such as Paytm and Freecharge also works on the same logic. However there are two fundamental differences. In case of wallets, user has to first transfer money from his/her bank account to the wallet and then from wallet to other person. But in case of UPI where money is directly transferred from bank account to the recipient’s bank account.

Read 28 differences between UPI & other payment methods.


Second difference where UPI scores over e-wallet is interest received on the money kept in the bank account. In case of UPI, since the money is in your bank account, the account holder receives periodic interest. This is not available in case of wallets. So interest earned is a very important point to be taken into consideration.

NEFT and RTGS are very commonly used options used by many individuals. However NEFT carries a minimum transaction cost of Rs. 2.5 whereas RTGS has a transfer cost of minimum Rs. 30.

So which is the cheapest fund transfers option amongst the all?

Unified Payment Interface is the clear winner in this case due to free transfer cost. However there is a per day transfer limit of Rs. 1, 00, 000 (1 Lac) in case of UPI. But if you want to transfer funds higher than Rs. 1, 00,000, then feasible option would be NEFT which carries a very small transaction charge.

USSD – Mobile banking with no internet connection & no transaction cost

All the above mentioned funds transfer options requires internet connection and smart phone. But there is one option requiring no internet & smart phone – which is Unstructured Supplementary Service Data (USSD) or *99#. And this technology was especially introduced to remove constraint of internet and smartphone. And target audience for this were the people from rural areas where internet connection is poor or not available, and smartphones are not much used. Because of this electronic transfer was not possible for people living in remote part of country.

USSD option was created by National Payments Corporation of India (NPCI). Through USSD, individual can transfer Rs. 5, 000 per transaction.

So, currently in Indian market “UPI & USSD” are the most viable payment methods as they do not have any transaction charges.

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