Charges on Digital Payments

Charges on Digital Payments

CHARGES LEVIED BY BANKS ON DIGITAL PAYMENTS 

Dated 22.08.2022 :  Now a days  in India ,  customers  can use   various  digital modes to make  transfer to an another account in the same bank    or   any other , payment of    merchant transactions   . Usually such transfers take place via   NEFT or RTGS for transfers   and Debit cards ,   credit cards    or wallets  for  all payments  .  Customers are charged  for the service rendered by the banks and other financial intermediaries . 
Now with a  view to streamline  charges   levied  on  payment systems in India , Reserve  Banks of India ( RBI )  has brought out a discussion paper   on    the issue and requests public to offer    their opinions on the various issues involved  with regard to the charges    .  

Presently RBI is not charging for the RTGS  transactions and wants    a  feedback on the issue of charging on it also     . Some of the specific questions posed by the  RBI on the   RTGS are  

1. Should RBI review the policy of not levying charges on members for RTGS transactions?
2. Should the time-variable charges be re-introduced?
3. For RTGS transactions, should RBI prescribe the charges that can be levied on customers by members, or should they be market driven?

Similarly  the discussion paper poses questions on various other modes    of Digital payment systems    . 

On NEFT  ,  RBI is charging following charges  : 

1. For transactions up to ₹10,000: ₹2.50/-;
2. For transactions above ₹10,000 up to ₹1 lakh: ₹5/-;
3. For transactions above ₹1 lakh and up to ₹2 lakhs: ₹15/-; and
4. For transactions above ₹2 lakhs: ₹25/-

The questions   asked by RBI on the issue  are  

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1. Should RBI charge member banks for transactions processed through NEFT?
2. Should banks be permitted to charge customers for NEFT transactions, whether initiated online or otherwise?
3. Should RBI prescribe charges for NEFT transactions to be levied by banks on their customers, or should they be market driven?

CHARGES LEVIED BY BANKS ON DIGITAL PAYMENTS ​  ( Continued ) 

On the issue of charges    on Debit card payments , RBI has raised the following  issues : 

1. Should debit card transactions be charged as normal funds transfer transactions?
2. Should MDR for debit cards be uniform across merchants (irrespective of turnover)?
3. Should RBI regulate interchange for debit card transactions?
4. Should RBI deregulate MDR for debit card transactions and let stakeholders decide on optimum level of MDR and interchange?
5. Should MDR for debit cards be a percentage of the transaction value or should it be a fixed amount irrespective of the transaction value?
6. Should RuPay cards be treated differently from other debit cards affiliated to international card networks in terms of MDR?
7. Among the two options (waiving / reducing MDR, or giving incentive to cardholders), which is more effective for increasing use of digital payments?

Again on the issue   of charges   on CREDIT CARD PAYMENTS   , RBI has raised the following points

1. Are credit card MDR charges reasonable?
2. Should RBI regulate MDR for credit cards?
3. Instead of MDR, should RBI regulate interchange for credit card transactions?
4. Should RBI regulate both MDR and interchange for credit cards?

Similarly   RBI has posed questions on wallet payments , UPI etc     and you can go through the  following paragraph   about the qusetions posed    by RBI   .  One can also  read   the  discussion paper   , by clicking here   

You may send   Specific feedback by way of response to the above questions, including other inputs and suggestions relevant to the topic under discussion  through (email) on or before October 3, 2022.

PPIs

Should RBI regulate MDR for PPI transactions?

Given that no credit is extended in case of PPIs, is it reasonable to charge high MDR (in sync with MDR levied on credit card transactions) for PPI transactions?

Should the charges structure for merchant payments done using PPIs be akin to that of debit cards?

Should charges for cash withdrawal using PPIs be regulated?

UPI

In the context of zero charges, is subsidising costs a more effective alternative?

If UPI transactions are charged, should MDR for them be a percentage of transaction value or should a fixed amount irrespective of the transaction value be levied?

If charges are introduced, should they be administered (say, by RBI) or be market determined?

Intermediaries

Should intermediaries be transparent in the way charges are levied by them?

Should the various charges levied by intermediaries be unbundled and charged separately?

Should these charges be subjected to regulation?

Surcharging

Are surcharges justified? Are they desirable?

Should merchants be allowed to levy surcharge on customers?

Should surcharging be regulated? By whom?

Convenience Fee

Should convenience fee be regulated? By whom?

Should such charges be the same irrespective of the number of seats / tickets booked?

Should such charges be based on value of a transaction?

Other Aspects

Should the levy of charges for a digital payment transaction be independent of the value of the transaction?

Should the levy of charges for a digital payment transaction be the same irrespective of the number of seats / tickets booked?

Should the levy of charges by merchants be marginal cost-based, meaning that only the additional costs incurred by them for facilitating a digital payment transaction should be recovered from the users?

Should the charges for digital payment transactions be market determined – based on demand and supply – without any regulatory or sovereign intervention?

What more transparency could be brought in for such charges?

RBI ASKS  BANKS TO ROLL OUT ICCW SCHEME FOR CARDLESS CASH WITHDRAWAL : 

Dated  20.05.2022 :  Reserve Bank of India ( RBI )  asked all banks /  ATM operators /  White Label ATM operators  to provide options to their customers  to withdraw cash   , without using cards ,   from their ATM networks  . Cash should be made available   from ATMs  of  any  member organization . 

RBI has asked    NPCI to facilitate Unified Payments Interface (UPI) integration with all banks and ATM networks. While UPI would be used for customer authorisation in such transactions, settlement would be through the National Financial Switch (NFS) / ATM networks. The on-us / off-us ICCW transactions shall be processed without levy of any charges other than those prescribed for other payments . Withdrawal limits for ICCW transactions shall be in-line with the limits for regular on-us / off-us ATM withdrawals.