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UPI Payments To Be Charged? Finance Ministry Responds.

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We are living in a digital world where money transfer from UPI is considered more efficient and user-friendly than using cash and it is indeed. Unified Payment Method (UPI) is a mobile payment system introduced by the National Payments Corporation of India. There are also other features like accessing balances and transaction history together with receiving or sending money. However, there were speculations on whether the government should charge for UPI payments or not.

The Central Government has its position on reports making claims that it may impose additional charges on UPI (unified payment interface) payments. In a set series of tweets on August 21, Sunday, The Ministry of Finance stated that UPI is a digital public good and there is no need to consider imposing any charges on UPI payments services. It is also stated in the tweet that the cost of recovery will be met through other resources or mediums. Also, the central government has offered financial support for the digital payment ecosystem in the country. The ministry has also announced assistance to promote further acceptance of UPI payments this year as well.

UPI payments
Image source: etimg.com

Here, are the tweets made by the Ministry of Finance

“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 Ministry of Finance stated in a tweet on August 21, Sunday.

“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,” the Finance Ministry stated in another tweet.

Source: www.thenewsminute.com

The clarification was made by the government amidst the claims regarding UPI transactions that it may impose an additional charge on these transactions with the purpose of maintaining and advancing the payments infrastructure in the country. The Reserve Bank of India (RBI) had also requested some feedback corresponding to this matter, in accordance with a discussion paper disclosed on August 17. However, the discussion paper not only stated about UPI transactions but also covered other digital payment methods such as IMPS i.e. Immediate Payment Service, the National Electronic Funds Transfer System (NEFT) and RTGS i.e. Real Time Gross Settlement system.

The discussion paper requested the government to take a re-look at its zero-merchant discount rate (MDR) policy which stays omitted on UPI transactions and RuPay. By means of the imposed charges on digital payments in the form of a Merchant discount rate policy, many service providers debate whether they can advance and enhance the payment systems.

The Payments Council of India which is the industry body in the country for the payments ecosystem had also sought the government previously this year to again introduce the zero-MDR scheme for RuPay debit cards and UPI transactions before the presentation of Union Budget 2022. At the moment, Mastercard and Visa debit cards make up to 0.4 to 0.9 MDR which is shared by the acquirer and the issuer bank.

In accordance with the UPI, the discussion paper sought by the reserve bank of India demanded feedback on whether it should be handled differently from the Mastercard and Visa debit cards. The government stated in a tweet that it promotes digital payments that are user-friendly and economical.

With this clarification, denying the speculation or claims by service providers, by the central government, it is clear that there will be no charges on the UPI transaction which is a benefit for users.

UPI

UPI, RuPay Cards To Soon Be Accepted In France As Payments.

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After revolutionizing digital payments in India, the Unified Payment Interface (UPI) is about to go live in France. NPCI Overseas, the international arm of the National Payments Corporation of India (NPCI), has signed a memorandum of understanding (MoU) with Lyra Network of France for the adoption of UPI and RuPay Cards in the country.

Unified Payments Interface and RuPay cards will soon be accepted in France, according to a Memorandum of Understanding (MoU) signed by NPCI International Payments Limited (NIPL) on Thursday with French payment services business Lyra Network. The announcement comes months after NPCI collaborated with firms such as Discover Financial Services (DFS) of the United States, Bhutan’s Royal Monetary Authority (RMA), Japan Credit Bureau (JCB) of Japan, and Network for Electronic Transfers (NETS) of Singapore to spread UPI and RuPay beyond India. The payments division’s parent business, NPCI International, announced on Twitter that it has collaborated with Lyra Network to launch UPI and RuPay cards in France.

“Considering India doing 5.5 billion UPI transactions per month, this strategic partnership will definitely prove to be a game-changer in the digital payments ecosystem,” IT Minister Ashwini Vaishnaw said in a statement.

Source: gadgets360.com

The minister also stated that the collaboration will be a step toward making Unified Payment Interface available to the rest of the world.

In April 2020, the NPCI Board of Directors and the Reserve Bank of India (RBI) created NIPL as a subsidiary of NPCI to increase the deployment of UPI and RuPay solutions outside of India. Since then, the worldwide body has collaborated with many organizations, payment networks, and banks in several countries to expand NPCI’s digital payment offerings.

UPI
Image source: thequint.com

NIPL collaborated with Bhutan’s central bank RMA in July of last year to enable QR-based Unified Payment Interface transactions in the country. It was an increase in NIPL’s presence in the Bhutanese market, as it had previously accepted and issued RuPay cards. This launch was expected to assist over 200,000 Indian tourists who visit Bhutan each year.

In February of this year, NIPL also collaborated with payments gateway Gateway Payments Service and fintech firm Manam Infotech to facilitate UPI-based payments in Nepal.

In May 2022, UPI recorded 6 billion transactions totaling $134.3 billion.. (INR 10.4 Lakh Cr). Transaction volume on the payments platform increased by 6.6 percent month on month (MoM) beginning in April 2022. It has surpassed about 80% of the transaction volume of 2021 in the first five months of 2022.

NPCI International joined the UAE market in April after forming a partnership with Mashreq Bank’s payment arm, NeoPay. With the collaboration, NPCI enabled Indian visitors in the UAE to make seamless payments using UPI at NeoPay-enabled shops and merchant stores. Along with expanding RuPay and UPI in global markets via NIPL, the Central government is taking steps to expand the reach of NPCI’s payments offerings within India.

The NPCI granted WhatsApp’s request to expand its UPI-based payments capability to 100 million users in April. It also introduced UPI Lite as a solution to allow small-value transactions to take place offline. Similarly, it launched the ‘123Pay’ UPI service in order to offer UPI to feature phone customers.

While NPCI was established in 2018, NPCI International was established as a wholly-owned subsidiary of NPCI in 2020. The international arm works on RuPay and UPI deployment outside of India.

The RBI recently declared that credit cards would be able to be linked to the UPI. The central bank stated that the service would initially be available solely on RuPay cards. Till now, only debit cards were authorized to be associated with the payment system. The change is likely to increase credit card transactions as well as boost the use of UPI.