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Payments Regulation in Asia
ACTIVE INTERCHANGE CAP DEVELOPMENTS IN 2023
India
In December 2021, the Reserve Bank of India (RBI) invited consultation feedback from stakeholders by October 2022 on a number of issues related to payment system charges, including proposal to introduce credit card interchange caps for the first time and to reintroduce charges for UPI, the nation’s real-time system, which has operated under a zero-interchange framework since 2020. 31 However, Finance ministry quickly issued a follow-up clarification stating its intention to maintain fee exemptions for UPI as it was “digital public good with immense convenience for the public and productivity gains for the economy”. 32 While the industry awaits further developments on credit interchange caps, fees have been introduced for UPI transactions performed in certain industries.
COUNTRIES WITH DISCONTINUED INTERCHANGE CAPS
Japan
Japan previously had a 3.25% interchange cap on credit card fees and a government- subsidized points program to offset the cost of the national sales tax increase from 8% to 10% in 2019. 33 Initially, the fee cap was intended to persist even after the conclusion of the points program in June 2020. However, due to significant pushback from the credit card industry, lawmakers reversed their stance, allowing card companies the discretion to decide whether or not to uphold the cap. 34
31 https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/DPSSDISCUSSIONPAPER5E016622B2D3444A9F294D07234059AA. PDF 32 https://www.thebanker.com/India-s-digital-payments-market-looks-beyond-its-borders-1692889695 33 https://asia.nikkei.com/Economy/High-credit-card-fees-threaten-Japan-s-push-to-go-cashless 34 Ibid
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