The Ministry of Finance issued a clarification regarding speculations that charges will be levied on UPI services, following an RBI paper. The ministry said that the government is not considering levying charges for UPI services. It added that the government had, in fact, announced financial support for the digital payment ecosystem.
“UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means.
The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly,” it said in a series of tweets.
The clarification came after the RBI published a discussion paper on charges on UPI services. In the paper, the apex bank had given the rationale that payment systems operators are independent entities who incur expenditure to create and operate safe and secure payment systems, acquire customers, comply with regulations and generate public awareness. “Therefore, like any other industry, the objective of promoters includes recovery of costs and generation of sufficient returns to ensure continued operations; the cost to customers/merchants is an outcome of these objectives,” it explained.
The RBI stated, “In any economic activity, including payment systems, there does not seem to be any justification for a free service, unless there is an element of public good and dedication of the infrastructure for the welfare of the nation. But who should bear the cost of setting up and operating such an infrastructure, is a moot point.”
It also said in its rationale for prescribing charges that it is important “to ensure that payment services are priced in a manner that retains incentives for both users to access the services and service providers to offer them.”
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today