Tag: upi

RBI Seeks Public Opinion on Fees, Charges in Payments Systems: All Details

The Reserve Bank on Wednesday sought views from the public on fees and charges in payment systems, with an aim to make such transactions affordable as well as economically remunerative for the entities involved. The payment systems include Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, Real Time Gross Settlement (RTGS) system and Unified Payments Interface (UPI). Debit cards, credit cards and Prepaid Payment Instruments (PPIs) are among the other payment instruments.

The focus of RBI’s initiatives in the payment systems has been to ease frictions which may arise from systemic, procedural or revenue-related issues, the central bank said while releasing a discussion paper on ‘Charges in Payment Systems’.

The Reserve Bank of India (RBI) has sought public views on 40 specific questions with regard to charges and levies in payment systems by October 3.

While there are many intermediaries in the payments transaction chain, consumer complaints are generally about high and non-transparent charges.

RBI stressed that charges for payment services should be reasonable and competitively determined for the users, and provide optimal revenue stream for the intermediaries.

“To ensure this balance, it was considered useful to carry out a comprehensive review of the various charges levied in the payment systems by highlighting different dimensions and seeking stakeholder feedback,” it said.

Charges in a payment system are the costs imposed by the Payment Service Providers (PSPs) on the users (originators or beneficiaries), for facilitating a digital transaction. The charges are recovered from the originators or the beneficiaries depending on the type of payment system.

In a funds transfer payment system, the charges are generally recovered from the originator of the payment instruction. These are usually levied as an add-on to the amount earmarked for remittance.

In the case of a merchant payment system, the charges are usually recovered from the final recipient of money (merchant). This is done by deducting the same from the amount receivable by the merchant or a discount to the amount receivable by the merchant.

Entities involved in providing digital payment services incur costs, which are typically recovered from the merchant or the customer or is borne by one or more of the participants.

While there are both advantages and disadvantages of customers bearing these charges, they should be reasonable and should not become a deterrent in the adoption of digital payments, the RBI had said earlier.

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RuPay Credit Cards Will Be Linked to UPI Platform in a Few Months: NPCI MD

With cash usage continuing to remain high despite a jump in online payments, a top NPCI official on Friday said currency in circulation will reduce only when a third of the population starts using digital payment alternatives.

National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer Dilip Asbe said that right now, the overall universe of people using services like the Unified Payments Interface (UPI) is 250 million or about a fifth of the population.

“… unless we see one-third of the population on both demand and supply side having the digital payment structure, it is very difficult to start seeing some reduction in cash in circulation,” Asbe said while speaking at an event organised by Bank of Baroda.

Given the current growth, he said it will take between 12 and 18 months for the reduction in cash in circulation.

For the last many months, high Currency in Circulation (CIC) has been baffling industry watchers since official data has been showing a spike in digital payments through mediums such as UPI.

CIC has risen to over 14 percent of GDP as against 12 percent in 2016 during demonetisation.

Asbe explained that it is a “complex situation”, and pointed out that despite the payments into people’s bank accounts under the direct benefit transfer scheme, people cash out from the Automated Teller Machines (ATMs). Moreover, ‘rolling cash’ has also increased as seen at ATMs and point of sale transactions’ average ticket sizes.

In developed countries, he said, CIC as a percentage of GDP is in single digits, and given all the efforts and awareness campaigns, “we should aim for the CIC to reduce to single digits in the next five years”.

Asbe said there will be ten times growth in the transaction volumes and Indians will be executing a billion digital payments transaction in a day.

He also said that in the next couple of months, RuPay credit cards will be linked to the UPI platform.

NPCI is in talks with SBI Cards, BoB Cards, Axis Bank and Union Bank of India for the same and will submit a proposal to the Reserve Bank of India (RBI) to take forward the policy announcement on the UPI front.

“We might have to take care of the smaller merchants and protect them from the MDR (Merchant Discount Rate) while the existing credit card servicing merchants can continue to pay,” he said.

UPI transactions, which were carried out till now linked to saving bank accounts, are free by mandate while the credit card players are allowed to charge up to 2 percent of a transaction as MDR which is to be paid by merchants.

Asbe said NPCI is in talks with over 30 countries from an internationalisation of UPI perspective, which includes both helping countries create their own payments networks and also making cross-country payments easier using the platform.

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