The Ministry of Finance issued a clarification via its official Twitter handle @FinMinIndia, putting to rest all speculations about levying UPI transaction charges. The government is not considering any such charges, it said. “UPI is a digital public good with immense convenience for the public & productivity gains for the economy,” it said in a Tweet. 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. (1/2) — Ministry of Finance (@FinMinIndia) August 21, 2022 The much-needed clarification is, however, raising two pertinent questions. First, how did this discussion about UPI transaction charges begin? Second, what are the alternate methods for UPI service providers to recover their costs? Here’s all you need to know now that the matter has been put to rest. RBI Discussion Papers On Charges In Payment Systems On August 17, 2022, the Reserve Bank of India (RBI) published a discussion paper on ‘charges in payment systems’. One of the rationales suggested that payment systems operators are independent entities which started with an initial outlay of capital. They incurred further expenditure to create and operate safe and secure payment systems, acquire customers, comply with statutes/regulations and generate public awareness, it said. “Therefore, like any other industry, the objective of promoters includes recovery of costs and generation of sufficient returns to ensure continued operations; the cost to customers/merchants is an outcome of these objectives,” the discussion paper said.
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