UPI Transactions to be Charged? Finance Ministry Clarifies

The statement was made in response to rumours that UPI transactions would be subject to an extra fee in order to support the payments infrastructure.

Highlights

  • According to the government, there are no plans to charge for UPI services.
  • The government claimed to have supported UPI adoption financially both this year and the year before.
  • The RBI had requested input on the matter.

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In response to rumours that it could introduce extra fees on UPI payments, the central government has clarified its position. The Ministry of Finance stated in a series of tweets on Sunday that UPI  is a "digital public benefit" and that there are no plans to charge for UPI services. The government has provided financial support for the nation's digital payments ecosystem, according to the tweet, which also stated that alternative methods must be used to fund the cost of recovery. The ministry continued by saying that it had also announced assistance for this year to promote increased use of electronic payments.

The statement was made in response to rumours that UPI transactions would be subject to an extra fee in order to support the payments infrastructure. According to a discussion paper published on August 17th, the Reserve Bank of India has also requested input on the matter. The document covered various digital payment methods, such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, and Real Time Gross Settlement (RTGS) system, even though it was not specifically about UPI transactions. The government's zero-MDR (merchant discount rate) policy, which is still in effect for RuPay and UPI transactions, was called for in the report. Service providers contend that by adding an MDR fee to digital payments, systems can be improved.

Before the release of the Union Budget 2022, the Payments Council of India (PCI), the industry association for the nation's digital payments ecosystem, wrote to the government requesting that the zero-MDR regime for UPI and Rupay debit cards be rolled back. Debit cards from Visa and Mastercard currently incur MDR (0.4 to 0.9%), which is split between the issuer banks and acquirer. The RBI's paper about UPI sought input on whether it should be handled differently from Visa and Mastercard debit. In the tweet, the government stated that it supports "economical and user-friendly" digital payments.

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Palak believes that creativity and simplicity are the keys for the best articles, it helps people to understand your point in a right way. She is also a traveller, love to explore new places, meeting new people and to know about different cultures and religions is what she love. She thinks writing is an art and when a artist holds a pen they create magic with their words.

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