India opens discussion on payment fees

The Reserve Bank of India (RBI) is seeking public feedback from consumers and merchants on all aspects of payment system fees across the country.

The central bank issued a work document Wednesday (August 17) with a request for comment no later than October 3. The document covers all aspects related to fees in payment systems, including Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Unified Payments Interface ( UPI), prepaid payment instruments (PPI), debit cards and credit cards.

“While there are many intermediaries in the payment transaction chain, consumer complaints generally relate to high and non-transparent fees,” the RBI said in a statement. Press release distributed with the paper. “Fees for payment services should be reasonable and competitively determined for users while providing an optimal revenue stream for 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 did not pass on merchant discount rate (MDR) fees to customers when accepting debit card payments. The same was not imposed for transactions made using credit cards and PPI.

Now the bank is now investigating whether the surcharges are justified, whether they should be allowed and whether they should be regulated. Convenience fees added to purchases made through movie pass and airline ticket booking services are subject to the same scrutiny.

See also: Reserve Bank of India tightens digital lending rules

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

The new oversight says only regulated financial institutions (FIs) can issue and collect loan repayments. Fees paid to applications will now be covered by the lender, with no charge to borrowers.

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

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