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Indian Banks’ Association asks NPCI to kill UPI fees 


After the government abolished the Merchant Discount Rate (MDR) last year, a new request has come in. The Indian Banks’ Association has written a letter to the National Payments Corporation of India (NPCI) requesting a complete waiver of interchange, PSPs and switching fees.

According to the letter dated January 22 and addressed to NPCI’s MD and CEO Dilip Asbe, the association has requested the corporation to abolish the aforementioned fees. This essentially means that the banks are willing to let go of the interchange fee but they have requested NPCI to consider zero switching and interchange fees.

The Unified Payments Interface (UPI) has been a battleground for Google Pay, PhonePe and Paytm but eventually, no one would make any money from the NPCI-backed payments railroad. 

 If NPCI accepts the request of the IBA and goes ahead with waiving off these components, then no one including banks, networks and third-party apps — PhonePe, Paytm and Google Pay will make any money from UPI and RuPay debit card transactions.

IBA has 252 banks as its members.  Its members comprise of public, private, foreign, cooperative regional banks. 

Entrackr has seen a  copy of the letter signed by B Raj Kumar, Deputy CEO, IBA.

The government had already abolished MDR on transaction via RuPay debit card and UPI from December 30 2019. In case, Asbe demolishes switching, interchange and PSPs fees, NPCI also would make nothing from RuPay and UPI transactions. Currently, it charges the switching fee from banks on RuPay card transactions.

“Since banks aren’t charging MDR on RuPay and UPI transactions, they don’t want any other stakeholder — be it a network or third-party apps to make money,” said one of the analysts tracking the fintech space at a big four firm. He requested anonymity.

PhonePe, Google Pay and Amazon Pay who have been burning multi-million dollars every month to command more market share in the UPI ecosystem won’t make a penny out of it. It’s worth noting that Paytm had pulled off from the race of supremacy on UPI since July last year. 

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