RBI to release discussion paper on charges in payment systems

With large scale adoption of digital payments, the Reserve Bank of India (RBI) will come out with a discussion paper on charges related to various channels of digital payments including credit cards, debit cards, prepaid payment instruments – cards and wallets, and UPI.

“Concerted efforts by all stakeholders have led to a significant increase in digital payments in recent years. There have, however, been some concerns on the reasonableness of various charges incurred by customers,” said RBI Governor Shaktikanta Das in the Monetary Policy Statement on Wednesday.

“It is proposed to release a discussion paper on various charges in the payment system to have a holistic view of the issues involved and possible approaches to mitigating the concerns to make the digital transactions more affordable,” he announced.

The paper will seek feedback on issues related to convenience fee, surcharging, and the measures required to make the digital transactions affordable to users and economically remunerative to the providers, said the Statement on Developmental and Regulatory Policies. The paper will be released in a month, it further said.

RBI Deputy Governor T Rabi Sankar said the proposal is to study all charges and fees in the payment space. “We will look at the incidence on all stakeholders. The idea is to float a discussion paper, get the feedback and then take a view on the fees,” he said at the post-policy press conference.

Experts said the move will bring in more transparency as well as boost the use of these payment channels.

“RBI’s decision on forming a panel to study the digital payments charges will mitigate the concerns of customers over the reasonability of various charges incurred by them and will bring in more transparency and regulation in the system as a whole,” said Ankit Bhatnagar, Head of Product, Mswipe.

“The decision of RBI to release a discussion paper on digital payments is extremely positive, which is likely to further accelerate the growth of digital payments, especially UPI, with a huge multiplier effect on the Indian economy,” said Mohit Ralhan, Managing Partner and Chief Investment Officer of TIW PE.

The government had earlier also removed merchant discount rate (MDR) charges on RuPay and UPI transactions. However, it has been a thorny issue for many in the payments industry as they had raised concerns over revenue loss and infrastructure expansion.

COMMENT NOW