Indian Users Unlikely to Accept Transaction Fee on UPI Payments: Survey

Only 12 per cent of Indian users say they’d keep using Unified Payments Interface (UPI) and pay a transaction fee if the government brings back Merchant Discount Rate (MDR) on payments above Rs 3000, a new survey by LocalCircles has found. This could be a shift only if Parliament passes the proposed amendment to Section 10 (A) of the Payment and Settlement Systems Act, 2007. According to the Payment and Settlement Systems Act, 2007, the Reserve Bank of India (RBI) is the sole authority on all the payments made online, be it through RTGS, IMPS or UPI in the country. It charges a certain fee from the Payment Service Providers (PSPs) and the banks. However, the section 10 (A) of the Act shields the consumer from paying any kind of fee. The proposed change in the bill suggests applying charges through MDR for UPI-related transactions. Though the bill does not levy charges on the consumers, banks and PSPs may transfer the burden to them. Responding to questions on whether the proposed legal changes could revive MDR, RBI chief Sanjay Malhotra urged caution during the Monetary Policy Committee Review Meeting. “Right now the government is bringing the amendment. Costs have to be paid by someone. We all want this public infrastructure to strengthen and become more efficient. That continues to be our focus. Let us wait and watch for further developments,” he said.