Charges in Payment Systems in India

Abstract

On August 17, 2022, Reserve Bank of India (RBI) brought out a “Discussion Paper on Charges in Payment Systems” with an intention to seek answers to few questions from the public. The objective of RBI’s nationwide exercise is to build more confidence on their internal analysis and thoughts while they arrive at solutions to this sensitive topic of charges in the payment systems in India. Going forward, RBI expects to analyze the responses received for framing their policy on charges that ‘should or should not’ get imposed onto the users of the payment systems. In an attempt to understand the questions posed by RBI in its entirety and meaningfully arrive at practically viable solutions, we present a three-part report addressing all questions. In the first part we take up all digital payment systems considered by RBI, other than those related to credit card and Unified Payments Interface (UPI). We find it more appropriate to take up UPI separately since that has come to be more universal in the hands of the public and where the government found it more appropriate to directly pitch-in, overshadowing RBI. Credit card is taken up separately because the credit card payment system is not exclusively a payment system since in it is embedded a camouflaged loan product, making credit card acceptance for merchants very expensive.