Discussion paper on charges in digital payments to be out in a month

The Reserve Bank of India (RBI) will come out with a discussion paper, in a month’s time, which will deal with all aspects related to charges involved in digital payments so as to make them more affordable.

“..it is proposed to issue a discussion paper which will cover all aspects related to charges involved in various channels of digital payments such as credit cards, debit cards, prepaid payment instruments (cards and wallets), UPI, etc,” the RBI said.  Further, the discussion paper will seek feedback on issues related to convenience fee and surcharging.  While digital payment volumes have surged, often merchants, who facilitate digital payments, incur huge costs. Customers are usually not charged for the transactions so the burden falls entirely on the merchants.

Experts said at no point in time will customers be charged for payments. Perhaps, the regulator will look at the charges from the merchant’s side as far as the discussion paper is concerned. Whether it is credit card, debit card or UPI, the consumer doesn’t incur any charge. It is the merchant who bears the cost in terms of merchant discount rate (MDR).  

“This is one area clearly where we believe RBI will bring down charges. This is very negative for fintechs in the payments space. Paytm, for example, as of FY21 has 70 per cent of gross revenues coming from payments .. a big risk here if wallet charges are regulated and reduced,” said Suresh Ganapathy, associate director, Macquarie Capital.