What the RBI misses about charges in payment systems
Live MintThe RBI has come out with a consultation on charges in payment systems. One, it does not take into account the prospect of a central bank digital rupee on the blockchain, which would greatly enhance the ease of use and reduce the cost of payments, and outcompete prior payment methods, unless these other payment methods offer competitive costs. Things to do before closing a savings account The mystery of milk price going up when WPI inflation is down Why JK Cement can’t rest on Q1 laurels Why mutual funds favour financial services but slash IT exposure The government’s policy of zero merchant discount rate on UPI payments and Rupay card payments should be extended to all digital/online payments, without discrimination. How to recover the cost of the credit risk credit card issuers bear is for them to work out, not for the RBI to bother about, except by stipulating that neither the card holder nor the merchant who is paid by the card would be charged for the transactions. Perhaps, the RBI could invite bids for the charge a payment ecosystem player expects per ₹1,000 crore of transactions, and fix the charge, based on the bid results.
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