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Is RBI going against Digital Payments?


Narendra Modi's Government had all efforts to divert the people from using cash for their transactions. NDA government did a huge campaign on digital payments for 8 years and it was successful to some extent. Many people go out without cash in hand these days. Because whatever you buy, you can just scan it and pay through UPI. This UPI is not only a facility but also free. But soon this situation is going to change. Fees may also be levied on UPI transactions. The Reserve Bank has recently released a discussion paper on 'Charges on Payment Methods. People are asked to give their opinions and suggestions on this document by October 3. Are low charges a viable alternative to zero charges? If charges are charged for UPI transactions should they be as a percentage of the transaction? Or should it be a fixed amount? Or should the regulator control the charges? Or should we leave it to the market to decide? RBI has asked for opinions and suggestions on these issues.


All charges related to various payment instruments like Unified Payments Interface (UPI) as well as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Debit Cards, Credit Cards, Prepaid Payment Instruments (PPIs). Topics are also included in this discussion paper. RBI said that the suggestions received through this will be used to formulate policies and strategies. In December last year, the RBI said that digital payment service providers incur costs, which are being collected from merchants or customers, or parties involved in the transaction. RBI will come up with a discussion paper with all aspects related to charges on digital payments. It has been released now.



UPI is the largest retail payment system in the country by transaction volume. According to National Payments Corporation of India statistics, 638.8 crore transactions were done through UPI during the year. More than 21 crore transactions are done daily. In UPI transactions Rs. 200 is worth less than 50 percent. One of the objectives of UPI is to reduce the use of cash in low-value transactions. However, these low-value transactions consume a lot of capacity and resources in the UPI payments system. Sometimes payments also fail due to system load. Many were angry on Twitter about the RBI discussion paper. ATMs do not have Rs.100 and Rs.200 notes, banks have Rs. There are no 50 notes, if UPI charges are raised, see how the activities in the economy will be affected,' said a user. Another user warned that if charges are imposed on UPI usage, people will turn to cash again. This charge should be paid by the merchant like a merchant discount rate (MDR) on the credit card. Because they are all businessmen, they should pay these charges to get money fast, another user quipped that 'it is fine to put 18 percent GST on it.
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