Source The Hindu
New Delhi: In a significant move that could reshape the digital payments landscape, the Lok Sabha on Thursday passed a bill authorising the central government to permit banks and financial institutions to levy charges on Unified Payments Interface (UPI) transactions.
The bill aims to provide a regulatory framework that would give the government flexibility to introduce fees on certain categories of UPI payments, which have so far largely remained free for users. Officials argue that the measure is necessary to ensure the long-term sustainability of digital payment infrastructure and to support banks and service providers managing rising transaction volumes.
During the debate, government representatives emphasised that the move does not immediately impose charges but merely enables the government to allow such fees in the future, if required. They added that any decision on levying charges would be taken carefully, keeping in mind the interests of consumers, small businesses, and the broader goal of promoting digital transactions.
However, opposition members expressed concern that introducing charges on UPI could discourage digital adoption, particularly among small merchants and low-income users who have benefited from zero-cost transactions. They warned that even minimal fees could reverse gains made in financial inclusion and digital payments growth.
India’s UPI system, operated by the National Payments Corporation of India (NPCI), has witnessed exponential growth in recent years, becoming one of the most widely used digital payment platforms globally. The introduction of potential charges marks a shift in policy direction and has sparked debate among stakeholders, including fintech companies, banks, and consumers.
The bill will now move to the Rajya Sabha for consideration before it can become law.
