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Not the time to ship digital payments: Nirmala Sitharaman

20220925 104606 1
20220925 104606 1

Not the time to ship digital payments: Nirmala Sitharaman

Not the Time to Pay for Digital Payments: Nirmala Sitharaman

New Delhi:

Union Finance Minister Nirmala Sitharaman said on Friday that the central government believes this is not the time to make digital payments.

Speaking at an event, Ms. Sitharaman said, “We see digital payment as a public good. People should be able to access it freely so that digitization of the Indian economy becomes attractive. Also, through digitization, we achieve a level of transparency that is very much needed.”

“So, we continue to believe that this is not the time to make it chargeable. We are pushing more and more towards open digital transactions, digitization, and platforms that can offer great access. The RBI recommendation is a working paper and lets the worksheet where it is.”

Ms Sitharaman’s statement came against the backdrop of a request by the Reserve Bank of India (RBI) for feedback from the public on various proposed changes to the payments system, including the possibility of levying tiered fees on transactions made through the Unified Payments Interface (UPI).

However, the Government of India announced last week that it will not charge any fees for UPI (Unified Payments Interface) services.

As announced in its December 08, 2021 Development and Regulatory Policy Statement, the Reserve Bank of India (RBI) has released a discussion paper on “Fees in Payment Systems” for public comment, the RBI said in a statement. The discussion paper was released on 17 August.

The focus of RBI’s initiatives in payment systems has been to mitigate frictions that may arise from systemic, procedural, or revenue-related issues.

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While many intermediaries are in the payment transaction chain, consumer complaints generally revolve around high and opaque fees.

Payment services fees shall be reasonable and competitively set for users while providing an optimal revenue stream for intermediaries.

It was useful to review the different fees charged in the payment systems by highlighting the different dimensions and seeking the views of stakeholders.

RTGS and NEFT Payment Systems are owned and operated in India by RBI.

Systems like IMPS, RuPay, UPI etc., are owned and operated by National Payments Corporation of India (NPCI), a non-profit entity promoted by banks.

Other entities, such as card networks, PPI issuers, etc., are private entities that maximize profit.

Notably, the number of digital transactions in July was the highest ever since 2016. UPI reported 6.28 billion transactions amounting to Rs 10.62 trillion, according to data from the National Payments Corporation of India (NPCI).

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