The Reserve Bank of India has sought feedback from stakeholders on the possibility of imposing a “tiered” charge on payments made through the UPI, based on different amount bands. The payment systems include Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, Real Time Gross Settlement (RTGS) system and Unified Payments Interface (UPI). Debit cards, credit cards and Prepaid Payment Instruments (PPIs) are among the other payment instruments.
The RBI has asked for feedback and suggestions before October 3. Currently, no cost is incurred by users or merchants in the case of payments made through UPI. The RBI has asked that if UPI transactions are charged, then should the merchant discount rate (MDR) be imposed based on the transaction value or should a fixed amount be charged as MDR irrespective of the transaction value?
MDR is the rate charged to a merchant for payment processing services on various payment instruments. For a person-to-merchant (P2M) transaction of Rs 800 on UPI, collectively, the stakeholders incur Rs 2 for processing the transaction, the RBI has explained. In the case of a merchant payment system, the charges are usually recovered from the final recipient of money (merchant). This is done by deducting the same from the amount receivable by the merchant or a discount to the amount receivable by the merchant.
Entities involved in providing digital payment services incur costs, which are typically recovered from the merchant or the customer or is borne by one or more of the participants. While there are both advantages and disadvantages of customers bearing these charges, they should be reasonable and should not become a deterrent in the adoption of digital payments, the RBI had said earlier.