The payments industry, especially those involved with UPI or unified payments interface, seems to have given up the hopes of dialogues with the banking regulator and the Finance Ministry to introduce some kind of charges for payments made through UPI.

While the RBI did not respond to queries sent by businessline, highly placed sources said the possibility of introducing fee or levy on UPI payments seems unlikely for at least a year or so.

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“There were several rounds of conversations between the Reserve Bank of India and the payments industry. Even until December last year, the regulator seemed in favour of introducing charges on UPI payments and agreed with the industry’s stance on why it was necessary to have some levy on these payments. However, now with all the focus on improving the acceptance and usage of retail central bank digital currency or CBDC, UPI doesn’t seem to be the focus point,” said a highly placed source who didn’t want to be named.

Discussion paper

On August 17, 2022, the RBI floated a discussion paper on payment system charges, which mulled on revising charges on all forms of digital payments, including UPI.

The paper also dealt with NEFT, RTGS, IMPS and charges on debit and credit cards. Among these, since most forms already mandate for some charges, there was a lot of interest on UPI in particular as this mode of payment did not attract any levy compared to others.

FM’s response

However, the Finance Minister was quick to respond to the RBI’s discussion paper on August 21, when she took to twitter to state that “UPI is a digital public good with immense convenience for the public and productivity gains for the economy. There is no consideration in the government to levy any charges for UPI services”.

Yet, the discussion paper which was open for feedback till October 3, 2022 evoked different response from the industry and various segments of the financial services sector which strongly recommended introducing graded levies for UPI payments as reported by businessline. .

The government had abolished merchant discount rates (MDR) on UPI from January 1, 2020.

Umbrella entities

Further, sources added that RBI may have also shelved its plans to issue licences for new umbrella entities (NUE).

With the issue of introducing charges on UPI remaining unresolved, it is gathered that NUE too is seen as an unviable proposition. A level-playing field between National Payments Corporation of India (NPCI) and the potential NUE candidates may also have to be reached before handing out the licences.

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