The Reserve Bank of India is looking forward to introducing ‘Tiered’ charges on UPI or Unified Payments Interface-based transactions. The regulator is seeking feedback from its stakeholders about the idea of imposing a ‘tiered’ based transition fee on UPI payments. Here these words ‘tiered based charges’ can only mean that the Central Bank is liking the idea to impose charges based on different levels of transaction amounts. We can only assume that ‘the higher the transaction amount the higher the charge will be.
RBI Seeking Feedback To Impose Charges On UPI
RBI released the discussion papers about charges in payment systems on Wednesday. Regulator seeks to design a structural and policy-based system for imposing charges for various payment systems including UPI, IMPS or Immediate Payment Service, “NEFT (National Electronic Funds Transfer), RTGS (Real-Time Gross Settlement), and payment instruments including debit cards, credit cards, and prepaid payment instruments (PPIs).”
“At this stage, it is reiterated that the RBI has neither taken any view nor has any specific opinion on the issues raised in this discussion paper,” said the Central Bank.
RBI is expecting feedback and suggestions about imposing the new charges before October 3.
“UPI as a funds transfer system is like IMPS. Therefore, it could be argued that the charges in UPI need to be similar to charges in IMPS for fund transfer transactions. A tiered charge could be imposed based on the different amount band,” reads RBI’s discussion paper.
RBI asked, “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?”
“UPI is the most preferred digital payment platform in the country, with over 6 billion transactions amounting to Rs 10 trillion processed every month. It is both a funds transfer as well as a merchant payment system. Back in 2020, the Union government had mandated a zero-charge framework for UPI transactions with effect from January 1, 2020.”