RBI discusses fees on payment systems; GPay, PhonePe transactions likely to be affected

Mumbai: The Reserve Bank on Wednesday solicited public opinion on payment system fees and charges, with the aim of making such transactions affordable and economically rewarding for the entities involved.

Payment systems include Immediate Payment Service (IMPS), National Electronic Funds Transfer System (NEFT), Real-Time Gross Settlement System (RTGS), and Unified Payments Interface (UPI). Debit cards, credit cards and prepaid payment instruments (PPI) are some of the other payment instruments.

The aim of the RBI’s initiatives in payment systems has been to mitigate frictions that may arise from systemic, procedural or revenue-related issues, the central bank said when releasing a discussion paper on ” fees in payment systems”.

The Reserve Bank of India (RBI) has sought public input on 40 specific questions regarding fees and levies in payment systems by October 3.

Although there are many intermediaries in the payment transaction chain, consumer complaints are usually about high and non-transparent fees.

RBI stressed that fees for payment services should be reasonable and competitively determined for users, and also provide an optimal revenue stream for intermediaries.

“To ensure this balance, it was deemed useful to conduct a comprehensive review of the different fees levied in payment systems by highlighting different dimensions and soliciting feedback from stakeholders,” he said.

Fees in a payment system are the costs imposed by payment service providers (PSPs) on users (originators or beneficiaries) to facilitate a digital transaction. Fees are collected from originators or beneficiaries depending on the type of payment system.

In a funds transfer payment system, fees are generally collected from the issuer of the payment instruction. These are generally deducted in addition to the amount assigned to the transfer.

In the case of a merchant payment system, the fees are usually collected from the ultimate recipient of the money (merchant). This is usually done by deducting the same from the amount to be received by the merchant or a discount on the amount to be received by the merchant.

Entities involved in providing digital payment services incur costs, which are typically recovered from the merchant or customer or borne by one or more of the participants.

While there are both pros and cons for customers incurring these fees, they should be reasonable and should not become a deterrent in adopting digital payments, the RBI had said earlier.

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