In view of the same, the central bank has proposed launching a UPI-based payment product for feature phone users, details of which will be announced shortly.

By Piyush Shukla

The Reserve Bank of India (RBI) has proposed issuing a discussion paper on all aspects of digital payment charges, including the ones incurred while using credit cards, debit cards, prepaid payment instruments, Unified Payment Interface (UPI), among others.

The central bank also proposed launching a UPI-based payment product for feature phone users. In its statement on developmental and regulatory policies issued post the monetary policy committee meeting held on Wednesday, the central bank said entities involved in providing digital payment services incur costs that are generally recovered from merchants or customers or is borne by one or more of the participants.

While there are both advantages and disadvantages of customers bearing these charges, the regulator said, they should be reasonable and should not become a deterrent in the adoption of digital payments.

The RBI’s discussion paper seeks to take feedback on these issues including those related to convenience fee, surcharging, and the measures required to make digital transactions affordable to users and economically remunerative to the providers.

The central bank will release a discussion paper on digital payments charges within a month. “The payment charges across various payment systems vary, thereby influencing the usage. “Small ticket payments are preferred on systems with low charges, while high ticket payments are preferred on payment systems like credit cards even at higher charges.

Harmonisation of payment charges at lower rates across systems could spur up the overall digital payment volumes further, thereby making it beneficial for users as well as service providers,” said Anil Gupta, vice president and sector head of financial sector ratings at Icra.

Further, as per October data from the Telecom Regulatory Authority of India (Trai), India had a mobile phone consumer base of about 118 crore mobile users of which, as per Statista, about 74 crore have smart phones indicating that there are many feature phone users in the country.

“Although feature phones have NUUP (National Unified USSD Platform) as an option for availing basic payment services using the short code of *99#, the same has not picked up.

“To deepen financial penetration, it is important to bring feature phone users into the mainstream digital payments,” the RBI said.

In view of the same, the central bank has proposed launching a UPI-based payment product for feature phone users, details of which will be announced shortly.