In January 2020, the middle withdrew the Merchant Discount Rate (MDR) for UPI and Rupay domestic open-end credit transactions, resulting in exponential growth in UPI payments.
MUMBAI: The finance ministry on Sunday said the govt. has no plans to charge for payments through the Unified Payments Interface (UPI) channel, ending speculation following the banking company of India’s (RBI) recent discussion paper on digital payment charges.
“UPI may be a digital public good with immense convenience for the general public and increased productivity for the economy. The government isn’t thinking of charging any charges for UPI services. Cost recovery concerns of service providers must be met by other means,” said a tweet from the official handle.
It said the govt had provided financial backing to the digital payments ecosystem last year and announced the identical this year to encourage further adoption of such payments and support of economic and user-friendly platforms.
In January 2020, the middle withdrew the Merchant Discount Rate (MDR) for UPI and Rupay domestic revolving credit transactions, resulting in exponential growth in UPI payments. MDR may be a fee paid by the merchant to the bank, card network, and point of sale provider for offline transactions and payment gateways for online purchases.
Unified Payments Interface is a moment real-time payment system developed by the National Payments Corporation of India (NPCI). The interface facilitates peer-to-peer and person-to-merchant interbank transactions. UPI is an open-source application programming interface that runs on top of the cash Service.
This has been a contentious issue and therefore the industry has repeatedly urged the govt. to review the choice, citing barriers to innovation and insufficient funding to support and upgrade the mandatory infrastructure. While considering whether the employment of payment mechanisms should come at a price to users, an RBI discussion paper on August 17 said payment system operators are independent entities and have set up expenses, signaling the likelihood of chargebacks.
“There seems to be no justification for a free service in any economic activity, including payment systems unless there’s a part of public good and dedication of infrastructure for the welfare of the state,” the RBI paper said.
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