The Reserve Bank of India (RBI) has solicited response from stakeholders by October 3 as to whether certain fees may be levied on various payment systems such as RTGS, NEFT, UPI, as well as credit and debit cards. . The move, which contemplates additional fees for transactions, could hamper India’s nascent digital transactions and push it to use more cash.
Should debit card transactions be charged like normal funds transfer transactions?
Should the MDR (merchant discount rate) for debit cards be uniform for all merchants (regardless of turnover)?
Should the RBI regulate the exchange for debit card transactions?
Should RuPay cards be treated differently than other debit cards affiliated with international card networks?
These were some of the questions raised by the central bank’s “discussion paper”.
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Bearing in mind that the intention of this discussion paper was to obtain general feedback, some questions on the approach to be taken have also been included.
“A discussion of fees in different payment systems, their reasonableness, alternative views, etc., is presented. A few questions were also raised after each discussion, in order to obtain feedback from stakeholders and the public. The discussion and input received would be used to frame policy interventions going forward,” the RBI said.
Currently, no fees are levied on UPI transactions as required by the government since 2020. This means that UPI fees are zero for users and merchants.
The RBI has also investigated whether digital payment transactions are charged according to their value.
“Since a digital payment transaction is all about a few clicks, should they be value-neutral? In other words, should the fees for a digital payment transaction be the same regardless the value of the transaction? This would mean that a transaction worth one rupee or one thousand rupees will have the same fees,” the central bank said.
The discussion paper also asked whether “high-value users” would “subsidize the cost of using a low-value transaction.”
The central bank also wanted to hear from stakeholders whether an additional levy per seat or ticket was justified if “the effort required to undertake a transaction or provide the service for one/a few tickets or seats is the same”.