Highlights:
- As per the government, there are no plans to charge for UPI services.
- According to the government, it has financially supported UPI adoption both this year and last year.
- The RBI had requested feedback on the subject.
The central government has clarified its stance in response to rumours that it would introduce extra fees on UPI payments. The Ministry of Finance stated in a series of tweets on Sunday that UPI (Unified Payments Interface) is a “digital public good” and that there are no plans to charge for UPI services. The government has provided financial support for the country’s digital payments ecosystem, according to the tweet, which also stated that alternative methods must be used to cover the cost of recovery. The ministry continued by saying that it had also announced assistance for this year to promote increased use of electronic payments.
The statement was made in response to rumours that UPI transactions would be subject to an extra fee to support the payments infrastructure. According to a discussion paper published on August 17th, the Reserve Bank of India has also requested feedback on the matter. The document covered various digital payment methods, such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, and Real Time Gross Settlement (RTGS) system, even though it was not specifically about UPI transactions.
UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means. (1/2)
— Ministry of Finance (@FinMinIndia) August 21, 2022
The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly. (2/2)
— Ministry of Finance (@FinMinIndia) August 21, 2022
The paper urged the government to reconsider its zero-MDR (merchant discount rate) policy, which remains absent on RuPay and UPI transactions. Service providers argue that by adding an MDR fee to digital payments, systems can be improved.
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Before the release of the Union Budget 2022, the Payments Council of India (PCI), the industry body for the country’s digital payments ecosystem, wrote to the government requesting that the zero-MDR regime for UPI and Rupay debit cards be rolled back. Debit cards from Visa and Mastercard currently incur MDR (0.4 to 0.9%), which is split between the issuer banks and acquirer.
RBI’s paper, regarding UPI, asked for feedback on whether it should be preserved differently from Visa and Mastercard debit. In the tweet, the government stated that it supports “economical and user-friendly” digital payments.
