India Opens Discussion on Payment Fees

Reserve Bank of India, payment fees, discussion paper

Public feedback is being sought from consumers and merchants by the Reserve Bank of India (RBI) regarding all aspects of payment system charges across the country.

The central bank released a discussion paper Wednesday (Aug. 17) with a request for feedback due no later than Oct. 3. The paper covers all aspects relating to charges in payment systems, including the Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), the Real Time Gross Settlement (RTGS), Unified Payments Interface (UPI), Prepaid Payment Instruments (PPIs), debit cards and credit cards.

“While there are many intermediaries in the payments transaction chain, consumer complaints are generally about high and non-transparent charges,” the RBI said in a press release distributed with the paper. “Charges for payment services should be reasonable and competitively determined for users while also providing optimal revenue stream for the intermediaries.” 

The feedback will be used to influence the direction of government policies and regulatory intervention strategies.

The RBI had previously advised banks to ensure that the merchants they onboarded didn’t pass merchant discount rate (MDR) charges to customers when accepting payments through debit cards. The same has not been mandated for transactions performed using credit cards and PPIs.

Now, the bank is now seeking feedback on whether the surcharges are justified, if they should be allowed and whether they ought to be regulated. Convenience fees tacked on top of purchases made by booking services for movie passes and airline tickets are getting the same scrutiny. 

See also: Reserve Bank of India Strengthens Digital Lending Rules

Earlier this month, India’s central bank handed down new guidelines for digital lending apps and the lenders who work with them, PYMNTS reported.

The new oversight indicates that only regulated financial institutions (FIs) can issue and collect loan repayments. Fees paid to apps will now be covered by the lender, with no burden placed on borrowers.

Additionally, the RBI ruled in June that non-bank issuers of PPIs can no longer load cards and digital wallets with funds through credit lines. The RBI’s edict will affect FinTech firms offering credit lines to their digital wallet customers and those providing prepaid cards in partnership with a banking partner or a non-banking partner.