RBI to streamline charges for a safer, more affordable payments system

Digital Desk: The Reserve Bank of India (RBI) aims to ensure that the nation has a cutting-edge payment system that is not only safe and secure but also quick and economical by streamlining the structure of fees for various payment methods.

The central bank published a discussion paper in August that explained current regulations for fees in payment systems and also offered additional ways that fees may be collected.

The central bank has said that it will organise its policies and simplify the framework of fees for various payment services and activities in the nation based on the feedback it has received from the stakeholders.

The RBI stated in the Trends and Progress Report that "this would ensure that India has a state-of-the-art payment and settlement system that is not only safe, secure, efficient, and fast, but also affordable."

According to the central bank, an effective payment system necessitates that the fees are properly calculated to guarantee the lowest cost to customers and the highest returns to operators.

Regarding the regulation of different fees for different payment mechanisms such as debit cards, credit cards, PPIs (pre-paid instruments), and UPI, the RBI took no position in the discussion paper and left it entirely open-ended. The RBI debated the advantages and disadvantages of charges continuing in their existing form for different instruments and questioned whether caps should be placed on costs for different payment instruments.

The possibility of imposing a tier-based fee on payments made through the Unified Payments Interface (UPI) based on various amount bands was also raised for comment. The government reacted strongly to this and unequivocally declared that now is not the time to charge for digital payments like UPI and that there are alternative ways to address the service providers' concerns about cost recovery.