A leading think tank advises India to uphold its UPI policies and defend its digital payments ecosystem against external pressure, especially from the US, amidst legislative changes regarding transaction charges.
Photograph: Kind courtesy SerenityArt and Simon/Pixabay.com and NPCI/wikipedia.org/Creative Commons
Key Points
- India must not rewrite its UPI policies under US pressure, defending competition and policy autonomy.
- The Lok Sabha passed a bill authorising charges on UPI and other electronic payment modes.
- Currently, banks and payment providers cannot charge users for UPI and RuPay debit cards, with zero MDR contributing to growth.
- A sustainable funding model is necessary for UPI, but it does not automatically require a general merchant charge, with alternatives available.
- The US Trade Representative's report criticised India's UPI and RuPay framework, highlighting international scrutiny on domestic digital payment systems.
India must not rewrite its UPI policies under US pressure, and it must defend competition, policy autonomy and the long-term sustainability of its payments ecosystem, think tank GTRI said on Thursday.Lok Sabha on Thursday passed a bill to amend the Payment and Settlement Systems Act, 2007, which authorises the government to permit banks and other service providers to levy charges on payments through unified payments interface (UPI) and other notified electronic payment modes.
Examining UPI's Funding Challenges And Zero MDR Policy
GTRI said that at present, banks and payment-system providers cannot directly or indirectly charge users for prescribed payment methods, including UPI and RuPay debit cards.It said that zero MDR contributed significantly to this growth by allowing consumers, small shops and roadside vendors to make and receive payments without transaction charges.However, banks, the National Payments Corporation of India (NPCI) and payment companies must invest in cybersecurity, fraud prevention, servers, dispute resolution and system expansion, it added.
Exploring Sustainable Funding Models For India's Digital Payments
"A sustainable funding model may therefore be necessary. But financing the system does not automatically require a general merchant charge."Alternatives include targeted budgetary support, government incentives, charges on large commercial transactions, cross-subsidisation from financial services and narrowly designed fees applicable only to high-turnover merchants," it said.
Navigating International Pressure On India's UPI Framework
GTRI claimed that the legislative change also comes against the backdrop of US criticism of domestic digital-payment systems.The US Trade Representative's 2026 National Trade Estimate Report on Foreign Trade Barriers criticised both Brazil's Pix and India's UPI and RuPay framework."India must not rewrite its UPI policies under US pressure. It must defend competition, policy autonomy and the long-term sustainability of its payments ecosystem," GTRI Founder Ajay Srivastava said.
Disclaimer: News content is sourced from the stated source. Headlines, summaries, section headers, and images are automatically generated or selected using AI/algorithms and may not always be fully accurate. Readers are advised to refer to the full article for complete context.
