Incentives on UPI 'appropriated by banks', says Payments Council chairman
A day after the government said it would not levy any charges on UPI transactions, Payments Council of India (PCI) Chairman Vishwas Patel has said that all the monetary support provided by the government for such transactions was appropriated by banks.
Dismissing talk of charges being levied on UPI transactions, the Finance ministry had on Sunday said that the government has provided financial support to the ecosystem instead.
The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly. (2/2)
— Ministry of Finance (@FinMinIndia) August 21, 2022
In response, Patel said: “All the support money provided by the finance ministry has been appropriated by the banks only (no single bank has even a significant single digit volume in UPI)… none of the payment aggregators or facility providers received anything.”
The government had in December 2021 announced a Rs 1,300 crore scheme to incentivise banks to push up digital transactions through Rupay cards and UPI method. Banks needed to show at least 10 percent year-on-year (YoY) growth in RuPay card usage and 50 percent YoY growth in UPI transactions to be eligible for the incentive. This incentive would enable them to give the digital service for free to customers.
Support for Digital payment ecosystem 😀😀.. all the support money provided by the finance ministry has been appropriated by the banks only ( no single bank has even a significant single digit volume in upi)… none of the payment aggregators or facility provider received anything
— Vishwas Patel (@vishwaspatel) August 21, 2022
However, it was not banks but PhonePe, Google Pay and Paytm Payments Bank that had a lion’s share of the UPI market at 95%. PhonePe alone is reported to have 46 percent share in monthly UPI transactions, followed by Google Pay’s 34 percent share.
Non-banking entities are complaining that charging zero fees on UPI transactions were resulting in a loss to the ecosystem and would discourage further investments.
The RBI had last week in a discussion paper sought to know whether charges should be levied on digital payment modes. This had set off talk that there could be such charges soon. But the finance ministry denied the same in a tweet on Sunday.
UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means. (1/2)
— Ministry of Finance (@FinMinIndia) August 21, 2022
