The central government has clarified its position on reports claiming that it may levy additional charges on UPI payments. In a series of tweets on Sunday, the Ministry of Finance said that UPI (Unified Payments Interface) is a “digital public good,” and there is no consideration to levy any charges for UPI services. The tweet also said that the cost of recovery has to be met through other means, and the government has provided financial support for the digital payments ecosystem in the country. The ministry added that it announced assistance this year as well to encourage further adoption of digital payments.

The clarification came amid speculations that UPI transactions may demand an additional charge in order to maintain the payments infrastructure. The Reserve Bank of India had also sought feedback related to the subject, as per a discussion paper released on August 17. Although the paper did not only relate to UPI transactions, it covered other digital payment modes such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, and Real Time Gross Settlement (RTGS) system.

The paper sought the government to re-look at its zero-MDR (merchant discount rate) policy, which remains absent on RuPay and UPI transactions. Through the fee levied on digital payments in the form of an MDR, service providers argue that they can improve systems.

The Payments Council of India (PCI), the industry body for the digital payments ecosystem in the country, had also written to the government earlier this year, which is before the presentation of the Union Budget 2022, to roll back the zero-MDR regime for UPI and Rupay debit cards. Currently, Visa and Mastercard debit cards attract MDR (0.4 to 0.9 per cent) which is shared by the issuer banks and acquirer.

In regards to UPI, RBI’s paper asked for feedback on whether it should be treated differently from Visa and Mastercard debit. The government, in the tweet, said that it encourages digital payments that are “economical and user-friendly”.


India today