‘Market forces should fix digital payments charges’, say experts
BENGALURU: The pricing of financial instruments should be left up to market forces, as it is important that players should continue to innovate, say experts. The Reserve Bank of India (RBI) has released a discussion paper on charges in payment systems.
This includes all payment systems such as Unified Payments Interface (UPI), Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT), among others. “Charges in a payment system are the costs imposed by the PSPs (payment service provider) on the users (originators or beneficiaries) for facilitating a digital transaction. The charges are recovered from the originators or the beneficiaries depending on the type of payment system” the RBI said.
Payment systems operators incur expenditures to create and operate safe and secure payment systems, acquire customers, and comply with regulations. The cost-related framework should be market-determined, said Saurabh Puri, Chief Business Officer, Credit cards, Zaggle.
The Payments Council of India (PCI) has appreciated the issuance of a discussion paper. Vishwas Patel, Chairman, PCI and Director, Infibeam Avenues said that the pricing of financial instruments should be left up to market forces, to continue to support the required investments and innovation in digital payments. As an industry body, PCI will submit detailed feedback to the RBI.
Rajat Deshpande, CEO and Co-founder, FinBox said it’s high time that we align incentives in a way that players continue to innovate and build cutting-edge digital experiences. “The pricing structure must have incentives for both - users to access the services and service providers to offer them,” he said. He added that different participating entities would have different cost structures to overcome.
Hence, a regulatory policy must leave enough room for entities to adopt revenue models that fit them best rather than having to necessarily take a straightjacket model. The central bank has also sought feedback on the interchange for credit card transactions and whether MDR (merchant discount rate) for credit cards should be regulated.