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UPI Charges = An Additional Tax! Ashneer Grover Warns Government – ??India Could Revert to a Cash Economy
BharatPe co-founder Ashneer Grover has strongly criticized the Central Government's move to levy charges on Unified Payments Interface (UPI) transactions. He stated clearly that imposing any fee on UPI is akin to levying a second tax on the public.
"If you start charging for UPI, you can say 'tata-bye-bye' to it. The UPI game will end right there," Grover warned the government in strong terms.
According to a gazette notification issued by the Central Government on September 14, no charges are to be levied on RuPay card and UPI transactions up to ?2,000. However, there is a possibility of charges being imposed on transactions exceeding ?2,000. Questioning this threshold, Grover said, "The government claims that transactions above ?2,000 account for only 4 percent of total transactions. But in terms of value, these same transactions represent a staggering 66 percent of the total UPI value. The government has picked a convenient figure to extract more money from the public. There is no logical basis behind this decision."
Is the Country Heading Back to a Cash Economy?
Grover warned that if a Merchant Discount Rate (MDR) or charges are applied to large transactions, shopkeepers and merchants would refuse to accept UPI payments exceeding ?2,000 and would insist on cash payments instead. If people revert to cash transactions, banks would need to set up more ATMs and offices. The costs associated with operating ATMs and handling cash would skyrocket.
He added, "If someone needs to pay ?12,000, they will break it down into smaller transactions—like ?2,000 or ?6,000—to avoid the charges."
"Who is losing out?" Grover posed a pointed question: "If the RBI, banks, and the NPCI are all making huge profits, then who exactly is losing out because of UPI? And what kind of subsidies is the government providing that it cannot afford?"
On the other hand, the government maintains that levying certain charges is necessary to keep the UPI system running smoothly. Strengthening cybersecurity and preventing online fraud require significant investment, and these costs cannot be met solely through government subsidies.
MDR rates will be determined by the UPI and Services Steering Committee, chaired by the National Payments Corporation of India (NPCI).
Ashneer Grover's criticism has reignited the debate over imposing charges on UPI.
BharatPe co-founder Ashneer Grover has strongly criticized the Central Government's move to levy charges on Unified Payments Interface (UPI) transactions. He stated clearly that imposing any fee on UPI is akin to levying a second tax on the public.
"If you start charging for UPI, you can say 'tata-bye-bye' to it. The UPI game will end right there," Grover warned the government in strong terms.
According to a gazette notification issued by the Central Government on September 14, no charges are to be levied on RuPay card and UPI transactions up to ?2,000. However, there is a possibility of charges being imposed on transactions exceeding ?2,000. Questioning this threshold, Grover said, "The government claims that transactions above ?2,000 account for only 4 percent of total transactions. But in terms of value, these same transactions represent a staggering 66 percent of the total UPI value. The government has picked a convenient figure to extract more money from the public. There is no logical basis behind this decision."
Is the Country Heading Back to a Cash Economy?
Grover warned that if a Merchant Discount Rate (MDR) or charges are applied to large transactions, shopkeepers and merchants would refuse to accept UPI payments exceeding ?2,000 and would insist on cash payments instead. If people revert to cash transactions, banks would need to set up more ATMs and offices. The costs associated with operating ATMs and handling cash would skyrocket.
He added, "If someone needs to pay ?12,000, they will break it down into smaller transactions—like ?2,000 or ?6,000—to avoid the charges."
"Who is losing out?" Grover posed a pointed question: "If the RBI, banks, and the NPCI are all making huge profits, then who exactly is losing out because of UPI? And what kind of subsidies is the government providing that it cannot afford?"
On the other hand, the government maintains that levying certain charges is necessary to keep the UPI system running smoothly. Strengthening cybersecurity and preventing online fraud require significant investment, and these costs cannot be met solely through government subsidies.
MDR rates will be determined by the UPI and Services Steering Committee, chaired by the National Payments Corporation of India (NPCI).
Ashneer Grover's criticism has reignited the debate over imposing charges on UPI.
"If you start charging for UPI, you can say 'tata-bye-bye' to it. The UPI game will end right there," Grover warned the government in strong terms.
According to a gazette notification issued by the Central Government on September 14, no charges are to be levied on RuPay card and UPI transactions up to ?2,000. However, there is a possibility of charges being imposed on transactions exceeding ?2,000. Questioning this threshold, Grover said, "The government claims that transactions above ?2,000 account for only 4 percent of total transactions. But in terms of value, these same transactions represent a staggering 66 percent of the total UPI value. The government has picked a convenient figure to extract more money from the public. There is no logical basis behind this decision."
Is the Country Heading Back to a Cash Economy?
Grover warned that if a Merchant Discount Rate (MDR) or charges are applied to large transactions, shopkeepers and merchants would refuse to accept UPI payments exceeding ?2,000 and would insist on cash payments instead. If people revert to cash transactions, banks would need to set up more ATMs and offices. The costs associated with operating ATMs and handling cash would skyrocket.
He added, "If someone needs to pay ?12,000, they will break it down into smaller transactions—like ?2,000 or ?6,000—to avoid the charges."
"Who is losing out?" Grover posed a pointed question: "If the RBI, banks, and the NPCI are all making huge profits, then who exactly is losing out because of UPI? And what kind of subsidies is the government providing that it cannot afford?"
On the other hand, the government maintains that levying certain charges is necessary to keep the UPI system running smoothly. Strengthening cybersecurity and preventing online fraud require significant investment, and these costs cannot be met solely through government subsidies.
MDR rates will be determined by the UPI and Services Steering Committee, chaired by the National Payments Corporation of India (NPCI).
Ashneer Grover's criticism has reignited the debate over imposing charges on UPI.
