DIGITAL PAYMENTS: New Modes of Digital Payments

In addition to UPI which was introduced recently, several other modes have been introduced by NPCI.

• Bharat Bill Payment System (BBPS)
• Bharat Interface for Money (BHIM)
• Bharat Quick Response Code Solution (Bharat QR)

Growth Drivers for Digital Payments

In 2017-18, the volume segment in Digital Payments is dominated by Debit Cards, PPIs and IMPS. These, together constitute close to 50 % of the total volume of Digital Payments. Their combined share in 2011-12 was ~ 14%. The Value segment in Digital Payments is dominated by RTGS and NEFT. These together constitute ~ 53 % of the total value of Digital Payments, which is almost same as in 2011-12

Authorized Payment Service Regulation

• Reserve Bank of India under the Payment and Settlement Systems Act, 2007 issues Certificates of Authorization for Setting up and Operating Payment System in India.
• Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008. Regulate the digital service providers
• There are 58 banks permitted to issue pre-paid cards in India (as on 22nd June 2018).

Digital Payments Service Charges

• RTGS Service Charges:These charges would consist of monthly membership fee and processing charges per transaction.
• NEFT Service Charges:
  • Inward transactions at destination bank branches (for credit to beneficiary accounts) – Free, no charges to be levied on beneficiaries.
  • Outward transactions at originating bank branches – charges applicable for the remitter. Originating banks are required to pay a nominal charge of 25 paise each per transaction to the clearing house as well as destination bank as service charge. However, these charges cannot be passed on to the customers by the banks.
• PPI/Mobile Banking/IMPS/USSD: No charges are prescribed by RBI and the charges are determined by the entity. As a temporary measure, it was decided that all participating banks and Prepaid Instrument (PPI) issuers would not levy any charges on customers for transactions up to Rs. 1000 settled on the Immediate Payment Service (IMPS). Also, no charges are levied on USSD-based *99# and Unified Payment Interface (UPI) systems.

What are the major policy initiatives taken to promote Digital Payments in India?

In Union Budget 2017-18, major policy announcements were made by the Finance Minister for promoting Digital Payments.

• Amendment of Payment and Settlement Systems (PSS) Act, 2007for structural reforms in the payment ecosystem is under process.
• BHIM:
• For promotion of the BHIM app, the Government has approved two promotional schemes namely ‘Referral Bonus scheme for individuals’ and ‘Cash-back scheme for merchants’.
  • For promotion of BHIM Aadhaar, a promotional scheme with total outlay of Rs 395 under the name ‘DIGIDHAN MISSION’ has been established.
  • BHIM Aadhaar Pay was launched by government of India on 14th April, 2017 as a merchant based mobile application for accepting payments from customers.
• Financial Inclusion Fund:
  • 3 BHIM schemes i.e. ‘BHIM Referral Bonus scheme for individuals’, ‘BHIM Cashback scheme for merchants’ and ‘BHIM Aadhaar Merchant Incentive scheme’.
  • Financial Inclusion Fund of NABARD is proposed to be augmented with Rs. 439.202 crore.