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Payments Regulation in Asia
being considered, but no timelines have been confirmed. 97 So far, the RBI has not directly reported interchange statistics on any channel.
ANALYSIS OF PUBLICLY AVAILABLE CARD FEES
The growth of digital payments in India has provided competition to card markets in India. India’s UPI offers account-to-account services such as bank transfers and bill pay on its platform that were previously mandated to operate at zero charge by the RBI. 98 Recently, this mandate has been changed to introduce interchange fees on retail transactions in April of 2023. A 1.1% fee will be levied for transactions above 2000 rupees. 99 The NPCI also announced stratified interchange rates for fuel (0.5%), telecom, public utilities, and agriculture (0.7%), and supermarket transactions (0.9%). 100 A separate interchange fee or mutual fund, government, insurance, and railway transactions of 1% was announced as well. 101 These interchange fees do not apply to account-to-account or peer-to-peer transactions. 102 The NPCI referenced research from the Reserve Bank of Australia and the World Bank was considered in the formulation of these fees. Moreover, UPI allows digital wallet functions that can be used with both card and QR-codes to initiate retail transactions. For card, digital wallet, and QR-code transactions carried out on the UPI platform, third-party participants can charge an MDR. 103 Card payments also have published maximum rates set by the RBI. Debit transactions using a QR-code have an MDR cap of 0.8% of transaction value, introduced by the RBI in 2018, with a separate 0.3% for small merchants. 104 Similarly, debit card merchant discount rates for POS transactions were capped at 0.9% of transactions for both card present and card- not-present transactions that same year with a small merchant cap of 0.4%. 105 The RBI has shared that it has a goal to promote debit acceptance. Previously in 2012, merchant discount rates for debit card transactions were capped at 0.75% for small transactions (under 2000 rupees) and a 1% MDR for larger transactions (above 2000 rupees) effective until December 31st, 2016. 106 Subsequently, a lower MDR of 0.25% for transactions up to 1000 rupees and a 0.5% cap for transactions between 1000 and 2000 97 https://www.business-standard.com/economy/news/how-are-upi-wallets-different-from-upi-all-that-you- need-to-know-123050400877_1.html 98 https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=21082 99 https://www.businesstoday.in/industry/banks/story/upi-payments-which-transactions-will-attract-npcis- 11-interchange-fee-check-details-here-375271-2023-03-29 100 ibid 101 ibid 102 ibid 103 ibid 104 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11183&Mode=0 105 Ibid 106 https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=21082
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