UPI services are "digital public goods," says government

22 Aug 2022 , 09:48 AM

Four days after the Reserve Bank of India (RBI) released a discussion paper on levying fees on payment systems, including the UPI, NEFT, and IMPS, the Finance Ministry on Sunday referred to UPI services as a “digital public good” and stated that the government is not considering charging for them.

Officials who were privy to the discussions that went into the central bank’s discussion paper claimed that the idea was only to assist companies that provide UPI services recover their operational costs, possibly by levying a charge as low as one or two paise per transaction. However, the Ministry claimed that these concerns could be resolved by other means.

“UPI is a digital public good that boosts productivity for the economy and the broader population significantly. There are no intentions within the government to charge for UPI services, the Ministry indicated in a statement on Sunday.

In order to encourage the continued adoption and promotion of payment platforms that are “economical and user-friendly,” the government has provided financial support to the digital payment ecosystem both last year and this year, according to the Ministry, who also added that the service providers’ concerns about cost recovery must be addressed in other ways.

In a discussion paper on fees in payment systems released on August 17, the RBI recommended that fees be fair and competitively set for users while also providing the best possible revenue stream for the intermediaries.

The central bank noted that consumer complaints about such services are “generally about high and non-transparent” charges, adding that it was “considered useful to carry out a comprehensive review of the various charges levied in the payment systems by highlighting different dimensions and seeking stakeholder feedback.”

The Reserve Bank of India (RBI) had stated that the main goal of its activities in the payment systems was to reduce frictions that could be brought on by systemic, procedural, or revenue-related problems. It had asked for public feedback on the suggestions in the discussion paper by October 3.

The discussion paper covers every aspect of fees for various payment systems, including Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), and Unified Payments Interface (UPI), as well as various payment options, including debit cards, credit cards, and Prepaid Payment Instruments.