Putting an end to the rumours that followed a recent discussion paper on digital payment fees published by the Reserve Bank of India (RBI), India’s Ministry of Finance announced on Sunday that the country’s government does not have any plans to implement fees for payments made through the unified payments interface (UPI) channel.
“The UPI is a digital public good that offers a great deal of convenience for the general public and increases in economic output.” There is currently no discussion taking place within the government on the possibility of instituting fees for UPI services. According to a tweet sent from the official handle, “the concerns of the service providers for cost recovery have to be resolved through other means.”
It was stated that the government had provided financial support for the digital payment ecosystem the year before, and it has announced that it will continue to do so this year as well. This is being done to encourage further adoption of such payments and the promotion of economically viable and user-friendly payment platforms.
The withdrawal of the merchant discount rate (MDR) on transactions made using UPI and homegrown versions of the Rupay debit card in January 2020 by the Centre led to an exponential increase in the number of payments made using UPI. When making offline purchases, a merchant is responsible for paying a fee known as MDR to the bank, card network, and point-of-sale provider. When making online sales, this fee is paid to the payment gateways.
This has been a difficult topic, and the business sector has frequently encouraged the government to reconsider its decision. They cite obstacles to innovation as well as limited finances to support and improve the necessary infrastructure as the reasons for their request. When the Reserve Bank of India (RBI) was debating whether or not users of payment mechanisms should be required to pay a fee, on August 17 they published a discussion paper in which they stated that operators of payment systems are separate entities that incur costs associated with the system’s setup. This indicates that fees are likely to be reinstated in the future.
