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Ex-NITI Aayog VP Rajiv Kumar Urges Government: Keep UPI Free Longer
- •Former NITI Aayog vice-chairman Rajiv Kumar advocates for continued zero-fee UPI transactions for several more years.
- •Kumar argues that introducing charges could prompt users to revert to cash, hindering digital payment adoption.
- •He suggests treating UPI as a public good, avoiding merchant charges until the currency-to-GDP ratio consistently declines.
- •Kumar estimates the cost of maintaining UPI infrastructure at Rs 20,000 crore, outweighed by its broader economic benefits.
- •His comments precede the new MDR framework, effective October 15, which imposes a 0.4% charge on P2M UPI transactions over Rs 2,000.
Key Questions Answered
Starting October 15, a 0.4 per cent Merchant Discount Rate will apply to specified person-to-merchant UPI transactions above Rs 2,000, capped at a maximum of Rs 300 per transaction. Essential and thin-margin sectors will have their MDR capped at a flat Rs 5 per transaction above Rs 2,000.
Former NITI Aayog vice-chairman Rajiv Kumar argued that introducing charges could incentivize regressive behavior by encouraging users to shift back to cash. He recommended keeping UPI free until there is a sustained decline in the currency-to-GDP ratio.
Person-to-person UPI transactions will continue to remain completely free. Additionally, person-to-merchant transactions up to Rs 2,000 and eligible transactions by small merchants will also remain outside the MDR framework.
