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India has paved the way for charging merchants a fee on UPI transactions
- uwagar 1mo agoif everything the govt provides has to be levied a fee, what is the tax collected for? oh probably buying weapons from usa, israel, uk, france and russia?
- attila-lendvai 1mo agothat is how you can maximize the "income": max inflation (printing) until people complain... max taxes until people complain... max fees, until people complain... IOW, introduce multiple names for the same thing to hide it behind confusing complexity.
- sieve 1mo agoPennywise, pound foolish decision. India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on. A $1B subsidy to eliminate friction on the payment front is peanuts.
- thisislife2 1mo ago[flagged]
- sieve 1mo ago> Treat the payment backbone as a public infrastructure. Yeah. Let banks fund this out of the 2% of NP they must use for CSR activities if they have to. > he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich I do not see this. In fact, he is TOO socialist. He was elected on the platform (one of them at least) of "minimum government, maximum governance" and has actually continued to expand the reach of government. The bureaucracy has not been tamed. The government continues to run businesses. Build a sovereign wealth/investment fund like Singapore if you want a share of the growth in the economy instead of running loss-making businesses for decades. And all the centralization of decision-making. He is more of Nehru/Indira than he thinks he is.
- thisislife2 1mo ago> I do not see this. In fact, he is TOO socialist. GST implementation, Demonetisation, unnecessary COVID restrictions etc. resulted in anarchy that was all designed to drain wealth (make labour cheaper) and / or transfer wealth from ordinary people or small businesses to the corporates (to make select rich, richer). He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries. The centralised decision-making stems from the fascist ideology that he subscribes to (RSS, the indian organisation that he emerged from, admired Mussolini and Hitler).
- sieve 1mo ago> GST implementation Needed. I run a business. The previous tax system was horrific in its complexity and corruption. > Demonetisation Implementation could have been better. But there is too much cash in the system for my comfort. Things must be digitized. We must ensure people pay their rightful share of taxes. > unnecessary COVID restrictions etc Hindsight. I remember how the media was blaming every single death on the government and making videos of funerals. We saw the best and worst of humanity during that period. > He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries Have you looked at the subsidy bills? Have you looked at the finances of the state governments? You know Modi was against the rewadi culture and then had to get into competitive cash giving? I absolutely hate it. But that is the cost of doing politics in India. Cities provide free bus rides to women, and run buses in competition to metro routes, making metros nonviable. This is such short-sighted behavior. I do not know what to say. > fascist ideology I do not agree with the criticism. At all. This is fairly typical of the nominal left in India and outside. Will paint with a large brush. To understand the RSS, you must go back to Hindu-Muslim relations in British India, to stoning of Hindu processions in Nagpur of the 1920s (which continue across India to this day), to the Moplah massacres and forced conversions of Hindus, and even farther back.[1] My biggest problem with the RSS is the hubris in the top echelon and deep anti-intellectualism. Bhagwat's "same DNA" theory is a laugh riot. But this is a different topic more suitable for a different thread. [1] Pakistan: A 300-year-old project that Jinnah completed with Partition (https://www.indiatoday.in/opinion/story/partition-india-pakistan-hindu-muslim-british-rule-independence-day-mughals-16th-century-communal-politics-2970981-2026-08-14 https://www.indiatoday.in/opinion/story/partition-india-paki...)
- dmix 1mo ago> he too subscribes to the anarcho-right political ideology Trump is not at all a libertarian? He's probably the least libertarian republican president in modern history. He is big government, anti-free market and anti-global markets (tariffs), pro-state intervention in industry favouring big legacy businesses (CHIPs act, auto companies, etc), and big on debt spending.
- thisislife2 1mo agoDid Trump's Tariffs create confusion and mayhem, increase price (drain wealth) and ultimately lead to the siphoning of billions of tax payer money (again, another drain) to rich corporates? Yes, it has. Make of that what you will ...
- dmix 1mo ago> Make of that what you will ... you have no concept of the political or economic spectrum, gotcha If you need some help google "authoritarian capitalism", "state capitalism", "crony capitalism", or "corporatocracy". All of those are in opposition to anarcho-capitalism. Aka rather than limit government power they encourage the expansion of government influence in industry, thereby enriching the entrenched power players (megacorps) and subsequently greatly reward politicians and ex-gov employees who played along. Anthropic/Dario is working on becoming the modern poster boy of this.
- thisislife2 1mo agoYour confusion is understandable as Americans use a different political spectrum scale (i.e. Americans have their own political labelling system) - outside America, anyone would scoff, and even laugh, at the claim that the Democratic Party in the US is supposed to be the "left". (For the rest of the world, both the Democratic party and the Republican Party are centre-right parties, with current Trump administration leaning even more to the right- ...).
- dmix 29d ago
- pessimizer 1mo agoIt's a bargain and exactly what governments are for. It's 70¢ per Indian. It's a payment highway and commerce is good. edit: replied to comment was rephrased during reply.
- sandeepkd 1mo agoOne of the reasons why the fee is being considered is under the pressure of other payment providers who are loosing to UPI in Indian market. Its been believed to be one of the negotiation points by the US-India trade deals
- whitefang 1mo agoRespect to China who foresaw this and built a massive economy without using anything of US.
- toomuchtodo 1mo agoSame reason the US is going after Pix in Brazil. The world is decoupling from the US and the US is going to try to flex against it as it continues. Dollar dominance and the “exorbitant privilege” continue to erode (with the acceleration self inflicted). Also shrinks the TAM of these private US firms to only the US versus the world. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege https://news.ycombinator.com/item?id=48994782 https://news.ycombinator.com/item?id=48994782 https://news.ycombinator.com/item?id=48415854 https://news.ycombinator.com/item?id=48415854
- icantevenhold 1mo agoSomething like Pix is a great blueprint for the future imo. I don’t want international private companies controlling payments, better have my own elected government manage it.
- toomuchtodo 1mo agoI encourage you to loudly champion such a model in your nation state to whomever is in power and will listen.
- catlikesshrimp 1mo agoIt goes both ways: What if the ONLY payment method was the one approved by your "elected" government. A balance where they can all exist is the best, and most difficult decision.
- spelk 1mo ago[dead]
- deleted 1mo ago[deleted]
- mlmonkey 1mo agoI don't think adding a 0.5% surcharge to transactions over Rupees 2000 is "pound foolish". Most transactions are smaller, and someone has to pay to maintain the infrastructure. :shrug: Also: just because money is being wasted on cause $X does not mean that there's more of it lying around to be wasted on cause $Y! You've got to draw the line somewhere!
- sieve 1mo ago> someone has to pay to maintain the infrastructure. :shrug: Under Indian law, companies must spend 2pc of their net profit on CSR activities (corporate social responsibility). Ask banks to use that money. The Indian banking sector made a combined profit of $40B this year. 2pc of that is $800M. Close to the $1B number. > You've got to draw the line somewhere! Draw it in the farm sector! They do not have to pay income tax on their income, get subsidies on fertilizers, free electricity, guaranteed prices for their crops. Small farmers cannot take advantage due to average holding size, and large farmers laugh all the way to the bank!
- deleted 1mo ago[deleted]
- ButlerianJihad 1mo agoIs "2pc" the same as 2%?
- sieve 1mo agoYes. Habit from typing on the phone where the % sign is hidden away somewhere on my keyboard!
- ivell 1mo agoI think you overestimate how many millionaire farmers we have. Most of Indian farm sector is small holdings and they need the subsidies. Most of the power is with intermediaries and not farmers themselves. The intermediaries fund the farmers through high interest loans and additionally they provide distribution. The situation is much more complex and needs a thorough rework.
- mock-possum 1mo agoWhy to women?
- sieve 1mo agoIndia is a conservative society. Women are 50% of the vote bank. They actually vote in larger numbers compared to men in many constituencies. They manage households and are very quick to notice price increases etc. The free bus rides and cash handouts are basically a transparent attempt to buy their vote. It is what it is.
- TitaRusell 1mo agoI wonder when Marx wrote "religion is opium for the masses" he had India in mind because goddamn it fits perfectly.
- dartharva 1mo agoIt fits perfectly literally everywhere on earth, the main challenge is in claiming that the masses can tolerate not being "intoxicated". For all we know religion is an inevitable characteristic of the human species.
- whyagaindavid 1mo agoThis happened post COVID - to help poor. A few states did that - saw electoral gains. It is not nationwide. There is also a misconception. It is not in all public transport. In TN state, it is on select buses - slower buses only.
- notaslave 1mo agoIn Kerala, its not for poor. Its for all women. If the women is traveling with a 5 year old boy, she has to pay for the boy though.
- whyagaindavid 1mo ago
- nonethewiser 1mo ago>India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on. >A $1B subsidy to eliminate friction on the payment front is peanuts. These are entirely independent issues. Should India subsidize farmers like this? IDK, maybe Should India charge fees on UPI payments? IDK, maybe
- kushalpandya 1mo agoIndia (central govt.) also doesn't tax farmers even when they've made bumper profits from their produce. The moment a political party even mentions of taxing rich farmers, their politics is over. Basically country is going to shits purely due to votebank politics, and this is true across party lines no matter who is in power.
- dartharva 1mo agoDo rich farmers really have enough strength in numbers to outvote other populations in India?
- whyagaindavid 1mo agoA large number of politicians are farmers. So...
- kushalpandya 1mo agoThey certainly wield power to mobilise poor farmers, leading to anarchy. Highly recommend reading about Farm Bills that govt. had to take back even when surveys by Supreme Court showed that over 85% farmers across the country were in favor of those bills and wanted them turned into laws.
- sidcool 1mo agoHow is it financially sustainable?
- jeswin 1mo agoAgree. Antiquated Indian farm subsidies are the biggest impediment to sustained growth. Nothing can be done, because it'd be electoral suicide to touch them. India's holding more than 100 million tons (!) of grain due to the mandatory procurement policy. It is not merely wastage, but also an environmental disaster to keep doing this. $1B or even $5B is nothing, given the impact UPI has had across the country.
- thisislife2 1mo agoMost of these reserve grains are already being diverted for Ethanol production once they "expire". It is sold to these Ethanol producers at low rates (subsidised). The Ethanol producers however sell these grains and make a tidy profit. They also buy back near-rotting grains dirt-cheap from these same suppliers and other markets. And then make Ethanol from it. The suppliers who bought the rice illegally, repack it and sell it again to the government! A good example of indian systemic corruption - Ethanol manufacturing: The ₹1,000 crore rice scam explained - https://www.youtube.com/watch?v=5lMw47iw6PQ https://www.youtube.com/watch?v=5lMw47iw6PQ
- potamic 1mo agoWhere do you see $1B subsidy? There is no subsidy. The system is already profitable. This will generate a new revenue stream of $1B for banks out of thin air that has no reason to exist.
- deleted 1mo ago[deleted]
- anon291 1mo agoIndian farmer subsidization is retarded. india needs to make farming as unattractive a profession as possible. Every social ill in the subcontinent is ultimately due to the fact that the majority of the population is in farming.
- 2Gkashmiri 1mo agoWho will feed 1.5 billion people then? Being dependent on trump for corn and rice?
- anon291 1mo agoYou don't need the majority of your population in farming to feed your people. In developed countries basically no one does farming. Farmers are technologists who operate vast fleet of machines to do the bulk of the work for them and who think in systems, not the quaint image of a simple man and his plough In other words in developed countries farming is mechanized in India it's not and until it's mechanized India is doomed to always be an agricultural pastoralist developing Nation
- never_inline 1mo agoBro thinks he can create more rice and wheat using `dd` command.
- anon291 1mo agoThe majority of Indians are involved in farming. In developed countries it's like three percent of the work force directly involved in farming. The job of farming is completely different in India versus developed nations. In developed countries farmers are essentially technical factory operators who use immense mechanization to grow crops. In India, a guy is steering an ox pulling a cart. You cannot build a developed nation without mechanized farming.
- coderedart 1mo ago[dead]
- ankurdhama 1mo agoDon't forget no income tax on "agricultural income" even if that income is millions.
- wewewedxfgdf 1mo agoThe Australian experience of allowing a transaction fee is simply that every single transaction adds the maximum amount. After whatever maybe 15 years that have banned the practice.
- HaloZero 1mo ago0.3-0.5% is still nowhere near the rates of visa and mastercard. Does UPI offer the same level of fraud protections or is it a free for all like Zelle is here in the states? Especially if they limit to > 2000 rupees. Hopefully they allow foreigners some track to access UPI in the future.
- zipy124 1mo agoAren't debit transactions capped at 0.2% in the EU and credit 0.3%?
- KellyCriterion 1mo agoin the EU, yes, but not in India with UPI ;-)
- throwaway473825 1mo agoNo, those are caps on the interchange fees paid to the issuing bank. Card transactions have other fees as well.
- zipy124 1mo agoThat is true yes. The interchange fees tend to be the largest component though. The ECB reports that the average transaction cost of debit is 0.44% [1] [1]: https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep241218_erpb_Fit_in_the_ecosystem_Competition.en.pdf https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse...
- danielmarkbruce 1mo agoVisa & MasterCards actual take is way lower than that. The fees that merchants see on cards are mostly collected by the banks - "interchange".
- thesimon 1mo ago> Hopefully they allow foreigners some track to access UPI in the future. https://havemony.com https://havemony.com Not cheap and only to business QR codes (so proper shops which probably will take credit card anyway), but it works.
- blfr 1mo agoIsn't 0.5% very competitive and basically nothing compared to taxes on the transaction? Here in Poland we have a budding "save cash" movement. And they make some good points about freedom and privacy but are the loudest about the processing fees when mostly it's a way for smaller merchants to avoid paying taxes. Which is fine, I think they should be exempted anyway, but let's not pretend that it's the 0.5% in fees rather than the 30% in taxes.
- nonethewiser 1mo agoPeople want every government service to run at a deficit and maximize the amount of pain inflicted to billionaires. They don't even need them to balance - they're just both good.
- stefan_ 1mo agoIn Poland fees are capped at 0.3% for credit card, 0.2% for debit per EU. Which is why generally in the EU you don't have the insanity with credit card loyalty programs.
- blfr 1mo agoOnly the interchange is capped. The merchant has to also cover network and processor fees. And then there are some uncapped transaction supposedly so the fee covers this risk. Comes out to 0.6-0.7% for a smaller merchant with the card present.
- kccqzy 1mo agoOne person’s insanity is another person’s interesting puzzle and optimization problem.
- kakacik 1mo agoYou optimize within realm of already paying higher fees, some optimization that is. Also, some of us have actual lives to live and not obsess over such details, life is way too short and has much more to offer than bean counting accounting.
- deleted 1mo ago[deleted]
- gsa 1mo agoI really hope cash transactions become a little more normalised in India. The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%). But let's say you accept that as a part of travelling - the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country. Alternative, since no one accepts cash anymore, is that I have to carry thick wads of cash so I can hand out exact change. That still gets you the stink eye because most vendors don't like to deal with cash anymore.
- edflsafoiewq 1mo agoSounds like it would be easier to hope for a better UPI experience for tourists.
- umeshunni 1mo ago> it's been an absolute nightmare for a tourist to play along. But the solution to this should be to simplify the tourist experience and to allow payments from foreign banks and cards. Traveling to China has a huge hassle in the late 2010s due to everyone local switching to WeChat/Alipay but it not being available for tourists, but in the last few years (I last visited in 2023), you could use WeChat/Alipay with a non-China bank card.
- chinagenie_ai 1mo ago[flagged]
- bix6 1mo agoIn 2026, you think cash could become more common instead of less? There is no way that happens unless they jack the fee up and even then…
- thesimon 1mo ago> the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country Same issue in a lot of Southeast Asia. After jumping through all hoops to get the correct app, id verified and paying a hefty fee, it was still a gamble if the restaurants would have a business QR code or a personal one. One time in Laos I was on an island that didn't have an ATM, almost no cards were accepted and I had run out of local currency. So I ended up asking for the QR code before ordering at the restaurant to make sure it would work out. In India it's super annoying when taking autos because the drivers won't have change and in 99% of the cases they have a personal code. So I just ended up using Uber with credit card, much less hassle. I don't know, central banks seem super afraid of money laundering somehow. But just allow me to spend $100 or what, I just want to buy a quick coffee or a fruit from a street vendor, not a Rolex.
- quesomaster9000 1mo ago> the system is now available in some form for payments in 11 countries outside India. I see this often cited, but in reality it's a farce. "UPI is international" the staunch defender says, so I rebut "Yes, in one place at the Eiffel Tower... everywhere else? The French have no idea what UPI is, and your bank will charge you stupid FX fees for card payments". Meanwhile if I'm in India, people look at me weirdly for paying with UPI yet most won't take card payments outside of tourist areas or it will get declined because foreign cards are blocked - and if you try to pay cash suddenly nobody has any change, will refuse to take the 20 rupee note they gave you yesterday, or have concerns about whether the notes you literally just withdrew from an ATM are legitimate - meaning you can end up with notes that are defacto unspendable despite being perfectly legal tender and in acceptable condition. And as a tourist... you want UPI? There are a few ways but they're byzantine, apps locked to the Indian App Store (for tourists?), in-person KYC upon landing, very low first-payment limit, topup/signup and idle fees that push the net fee % easily into the 5-10% range. Lets look at a perfect example... you pre-KYC on an app ahead of your trip on the one app that allows remote KYC, but you can't load money onto - first you must provide your visa, but the eVisa doesn't count they want the actual visa stamped in your passport. You land, immediately after customs you submit the picture of your visa stamp and wait an indeterminate amount of time, it could be 8 hours, or 24 or 48 or it could get rejected and you could be required to do in-person KYC (either you go to them, or they come to you within a ~5hr window... but only in the major cities). So day 1 it's impossible to use UPI. It gets approved on day 2, you take a taxi somewhere maybe a nice restaurant, your UPI is now loaded with INR and you try to pay the driver... Your driver has a personal UPI account, you can't pay him! You only have cash... Large denomination INR notes because that's what the ATM provides, he doesn't take card and refused to admit he has change. You eat the already inflated cost and swear to only use app-based services (assuming the Taxi Mafia hasn't had them banned in your city). You get to the resto and enjoy a meal with your friends, it's a nice place and somewhat expensive, you come to pay, the bill is reasonable and you think "I will pay with UPI", you try paying, it's a business account so should be OK! NO.... You have exceeded your first-day limit! Waiter tells you there is no card machine, and they have no change for cash... Eventually you leave India, there's a non-trivial amount left in your tourist UPI account, you look for somewhere to withdraw it back to your card - no physical counters open at the airport, you request a withdrawal via the app... it never comes, the next month you get hit with a 500 INR inactivity fee, your visa expires and the app shuts down, next month 500 INR inactivity fee - can't make support requests through the app any more because your visa is no longer valid... Your balance slowly goes to 0 because you didn't think to spend every last rupee on your way out so it gets eaten by the system. I say a small sub-1% fee on UPI is fine, it's great infrastructure when it works, but more needs to be done with global UPI integration. I have QR enabled payments available across maybe 10 different countries and India sticks out as being the one that's consistently an absolute pain and actively works against you.
- ChrisArchitect 1mo agoTitle is: UPI: India built the world's biggest digital payments miracle. Now comes the bill
- rappatic 1mo agoApparently even BBC reporters now use LLMs to draft their articles.
- malshe 1mo agoTotally understandable. No human working at BBC will ever write a neutral or positive story about India
- dhruvrrp 1mo agoDid we read the same article? This seemed pretty positive about UPI as a whole, while covering the expected drawbacks of adding fees.
- malshe 1mo agoIt's written by AI so it's positive
- vkaku 1mo agoIn this case, the callout about increasing Merchant Fees is the right thing to do. This isn't great for payments at all. Reduce the friction, improve ease of business.
- Karthick81 1mo agoUPI payment has enabled tracking actual sales data and helped with tax collection. This is an intangible benefit which is likely to go away with the introduction of the fee.
- sieve 1mo agoRight, this has second and third order effects. I am sure this must have been brought up during the discussions and overruled for whatever reason. The bureaucrats and politicos involved are not stupid. But there is some game being played here.
- nonethewiser 1mo agoHow would a fee preclude tracking sales data and collecting taxes?
- wasfgwp 1mo agoThe government being able to monitor and control how every individual spends money is a double-edged sword though
- jmward01 1mo agoYesterday an article on tipping hit HN and this reminds me of it. When you remove barriers people spend freely. Start throwing stupid pause moments, the value doesn't match the advertised price because of x fee, y tax, z undisclosed service or an outright wall screen begging for a tip, and people slow down their purchasing. It will be interesting to see an impact here if this goes through and it could be instructive to the value prop that tips bring to industry. You may think you are externalizing a cost but maybe you are really harming sales.
- areoform 1mo agoEver since someone brought up this system a while ago and confused it with a Real-Time Gross Settlement (RTGS) system https://news.ycombinator.com/item?id=48875605 https://news.ycombinator.com/item?id=48875605 , it has been bothering me that seemingly no one is talking about the real long-term cost of this "free system." The history of payment systems is a history of risk. A quick primer, All large-scale payment systems that interface with banks must have an answer for the inherent conflict between what the bank does (i.e. provide debt) and how it does it (by taking savings). If the purpose of banks is to take capital from customers and use it to provide debt to others, then how much money should they keep for their customers' withdrawals and transfers? If you do constant transfers back-and-forth 24x7 multiple times a second, then banks need a lot of capital at hand to manage the liability. So even though gross settlement is supposed to be real-time, most RTGSes allow banks to borrow from their government's central bank via an "intra-day credit" system and then effectively net / settle at the end of the day, https://www.newyorkfed.org/research/epr/08v14n2/exesummary/exesum_bech.html https://www.newyorkfed.org/research/epr/08v14n2/exesummary/e... This loophole in a supposedly real-time system reduces the amount of money that banks "actually" owe each other. This allows banks to keep smaller reserves and provide greater amounts of capital to their customers. You can see the different daily settlement points for the US here, https://www.federalreserve.gov/frrs/regulations/ii-federal-reserve-intraday-credit-policies.htm https://www.federalreserve.gov/frrs/regulations/ii-federal-r... But if you net only a few times a day, it creates risk. What if a bank becomes insolvent in between? Then it wouldn't be able to meet the obligations created by its customers, which would mean that other banks would fall short on their obligations and so on. It's a network contagion effect; which is partly why the US Fed spent the better part of a decade studying counter-party risk in settlement systems before designing the latest version of its RTGS. The Fed has protocols in place to stop such contagions before they start. Does the Indian government and its central bank? Where's the capital required going to come from? If a bank fails, who pays for its obligations? The Fed (currently) has a free infinite money glitch backed by the US Military, but the Indian government doesn't. So... where's that money going to come from? Who is underwriting this system? Have they modelled systemic collapse? Because given what I've read about Indian banks and their bad debts, https://www.bbc.com/news/world-asia-india-58654740 https://www.bbc.com/news/world-asia-india-58654740 it's a when not an if. Cue a billion people panicking...
- hx833001 1mo agoThis is very surprising because the proposed rates would equal or be higher than regulated interchange for Visa and Mastercard in Europe.
- smallmancontrov 1mo agoI thought the regulated interchange rates for Visa and Mastercard in Europe were tiny (compared to the US).
- wasfgwp 1mo agoIn reality it’s closer to 0.5-1% in Europe since banks apply their own fees on top of the regulated interchange rate.
- TheqO 1mo ago...That may be about to change... ...The government has yet to decide the rate or exactly where it will apply... ...One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies.... So discussions are at an early stage and an excited journalist has made a international article out of a national one. It's up to Indians to make clear what they are willing to tolerate in this consultation phase.
- rramadass 1mo agoKey Points: The government has yet to decide the rate or exactly where it will apply, but proposals under discussion include a merchant discount rate (MDR) of 0.3-0.5% - a small fee paid by a business to the banks and payment companies that process its UPI payments - on larger transactions at big businesses. The government says consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free. One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies. That could generate a sizeable new revenue stream - up to a billion dollars, by one estimate - for banks and payment companies while leaving the everyday smaller payment to the neighbourhood grocer effectively unchanged.
- adityaathalye 1mo agoSummary reflection: As a happy user of UPI, I think is incredible. I want it to be more resilient, from our national economic standpoint. A (small as possible) fee, judiciously applied, will hopefully create generally constructive back-pressure on the digital side of the cash economy. --- Why the oxymoron; "digital side of the cash economy"? Zero-cost-to-consumer one-rupee instant transaction system is basically cash economy. Because, at least here in India, our so-called "informal sectors" have switched wholesale to it in Metro to Tier 2 cities. Significantly in Tier 3 cities and smaller towns. And non-uniformly across rural / village panchayat areas. UPI, and indeed, digital transaction uptake essentially hews close to the availability of reasonably reliable grid electricity and mobile Internet connectivity and access to banking services. The abundance of low-cost UPI-capable devices is useful only if these precursors are useful. Reasonable fee as an economy-scale tuned mass-damper. I hope the result of applying merchant-fee-as-back-pressure, at any size of transactions, translates into a sizeable up-tick in hard cash transactions. Nations of people that want to remain sovereign and democratically-run, ought to incentivise heterogeneity of money flow mechanisms. Especially, they/we, the people, must ensure, through our democratic influence as citizens, that a sizeable portion of the/our economy is person-to-person hard cash transactions. And this provides a measure for "is the fee punitive?". Let's say, hypothetically, India's money supply mechanism is resilient if about 75% of money supply is digital, and 25% is hard currency. Anything outside this envelope is tending towards punitive costs on the people, both as tax payers and as transaction-fee-payers. Our central bank could manage the money mix, through judiciously tuned per-transaction fee on UPI and other digital payments, not unlike managing the volume of banknotes in circulation. The digital printing press is infinite money, if the effective fee is zero (psychologically). Sometimes, you want to make the fee zero, to bring it all into balance again, but most times, you want to create some friction to keep it from becoming a nation-state level attack vector (whether self-goaled or externally inflicted). Crypto currencies and/or CBDCs are emphatically NOT the answer for such resilience. I'd go so far as to argue that those forms of currency undermine (pun intended) sovereign economic resilience, where "sovereign" includes the little guy as much as it does a multinational or a country.Crypto system infrastructure is brittle by design and construction. Its effective use is predicated on the magical availability of wildly complex planet-scale electrical and communication infrastructure, not to mention dedicated tending-to of fast-decaying compute hardware, by literally every single participant in the network. A USB stick of gold-brick valued crypto, buried in the backyard is not at all equivalent to a brick of solid gold buried in the backyard. Digital money systems make top-echelon black-box corruption easy. Hard cash makes it hard. Recent years have made it patently obvious that digital-first money flows are wide open to centrally-controlled and/or monopolistic manipulation by individuals in power. Consider the logistics of managing USD 1M in small bills. Hell, even USD 100 bills because 1M of those is about 10 Kilograms of paper mass (or about 22 pounds for you non-SI enjoyers (why?)). Now you need a large handbag, or a cool trench coat with several large pockets. Multiply 1M in USD 100 bills, by 1,000, for billion-dollar corruption. That is 10,000 Kg of paper bills alone [0]. Now, add to that, the industrial pallets, containers, and packing material to hold it all sensibly. Let's say 1,000 Kg for each such cash pile. Further, add to that the real-world infrastructure and organisational capacity to construct, maintain, secure, transport, and otherwise manage the infrastructure needed to hold and deploy your USD 1Bn in hard cash. This staggeringly capital-intensive exercise is subject to economies of scale. These facts of life make it that much harder for anybody, especially enemy nation-state actors, to physically perpetuate large-scale money-supply based corruption of the kind being increasingly perpetuated by individual people, in private and public life, because they are able to exercise state-level power over digital economies. Furthermore, currency notes are ridiculously hard to counterfeit --- AFAIK Indian banknotes (and US ones) are among the most secure (as in transaction-trust-secure) forms of monetary exchange humans have crafted. Printing and injecting those into an economy at scale, to launch an inflation-attack requires nation-state level capacity at multiple levels, and the geopolitical incentive to do so. And if they do, it does not remain surreptitious for long. Co-opting money systems, especially crypto-currencies to private ends and/or a offensive economy-destabilising tools, is trivial in comparison. You don't need to launch a 51% attack on the ledger. You just need a big enough psychological spanner, delivered into everyone's infinite brainrot feeds, to make 'em believe in The One True Currency; one that benefits you personally the most, obviously... Obligatory XKCD: "Security" https://3d.xkcd.com/538/ https://3d.xkcd.com/538/ --- [0] More paper-napkin arithmetic: https://www.ehd.org/science_technology_largenumbers.php https://www.ehd.org/science_technology_largenumbers.php and https://goodcalculators.com/money-weight-calculator/ https://goodcalculators.com/money-weight-calculator/ etc... (no affiliation to any of them). (edit: fix typos, add clarifications, maybe I should have made an actual blog post... my publishing workflow isn't indieweb enough yet, sorry :'))
- never_inline 1mo ago[dead]
- autoexec 1mo agoForcing people to scan a QR code to get a price and pay is a great way to charge people different prices based on whatever data you have on them. Everybody is just taking photos never knowing what the last person to take a photo was asked to pay for the same product.
- potato-peeler 22d agoIncorrect. Price is displayed upfront, inclusive of taxes.
- digitalPhonix 1mo ago> Servers have to run, transactions settled, fraud detected and the system protected against cyberattacks. For years, the government has helped compensate banks and payment firms for providing a service that has effectively been treated as public infrastructure. Sounds like it should just be public infrastructure and the government pays to maintain it. Governments have paid to maintain a finance system since the introduction of token money (by minting the currency as a public good; also funding policing to prevent counterfeit) so this is effectively the same.
- maxglute 1mo agoWhat's refund/dispute like in India?