No Plans To Levy Charges On UPI Payments: Finance Ministry
Suppose you wake up in the morning and you read in your newspaper that from now onwards, you have to pay an additional fee for making payments via digital platforms, such as PayTM, PhonePe, Google Pay, etc. In that case, what will be your reaction? Probably, you may decide to switch to a regular cash-based framework. Well, this nightmare is about to come true as the RBI has recently published a discussion paper through which it sought suggestions from stakeholders on the provisions to levy charges on UPI payments.
However, the Finance Ministry, on Sunday, clarified its stand on the said proposal of RBI, citing digital payment services as a service of “digital public good”. The ministry said it is not considering any proposal to levy charges on users for using digital payment platforms.
The Finance Ministry gave its clarification against the recent proposal of the RBI in which the central bank proposed to levy charges in payment systems, including Unified Payment Interface (UPI), National Electronic Fund Transfer (NEFT), and Immediate Payment Services (IMPS).
According to officials aware of the deliberations, charges on digital payments can facilitate service providers to recover their operational costs. The RBI circular included deliberation on the proposed transfer fee of as low as one paisa or two per transaction. However, the ministry responded that the government would find alternative solutions to recover the operational costs.
Finance Ministry Response To Charges On UPI Payments
“UPI is a digital public good with immense convenience for the public and productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means“, the ministry tweeted late on Sunday.
In the same thread, the ministry added, “The Govt had provided financial support for Digital Payment ecosystem last year and has announced the same this year as well to encourage further adoption of Digital Payments and promotion of payment platforms that are economical and user-friendly”.
With the second tweet, the ministry also clarified that the government is eager to normalize the digital economy in India’s financial system. This is why the government is providing all sorts of relief measures to digital service providers.
UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means. (1/2)
— Ministry of Finance (@FinMinIndia) August 21, 2022
What RBI Proposed About Charges On Digital Payments?
On August 17, the RBI issued a discussion paper on prospects of levying charges in digital payment systems. Through the circular, the RBI stated that charges on UPI payments should be reasonable and competitively determined for users.
Reserve Bank of India releases Discussion Paper on Charges in Payment Systemshttps://t.co/G7B32AF3xK
— ReserveBankOfIndia (@RBI) August 17, 2022
The press release highlighted, “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”.