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RBI Releases Discussion Paper On Charges In Payment Systems; Seeks Public Feedback

The focus of RBI’s initiatives in the payment systems has been to ease frictions which may arise from systemic, procedural or revenue related issues

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The Reserve Bank of India (RBI) on Thursday has released a discussion paper on “Charges in Payment Systems” for public feedback as announced in the Statement on Developmental and Regulatory Policies dated on December 8, 2021.

Feedback may be provided in respect of questions raised therein, including other relevant suggestions, through email on or before October 3, 2022.

Harish Prasad, MD, Banking Solutions, India, FIS said, "With explosive growth of digital payments, issuers, acquirers and PSOs are having to incur constantly increasing operating and technology costs to deliver these services, and the discussion paper from RBI is very timely. Comments have been invited by RBI from all constituencies which can include end-consumers of these services, allowing for all viewpoints to be heard and considered."

The focus of RBI’s initiatives in the payment systems has been to ease frictions which may arise from systemic, procedural or revenue related issues. While there are many intermediaries in the payments transaction chain, consumer complaints are generally about high and non-transparent charges.

Charges for payment services should be reasonable and competitively determined for users while also providing optimal revenue stream for the intermediaries. To ensure this balance, it was considered useful to carry out a comprehensive review of the various charges levied in the payment systems by highlighting different dimensions and seeking stakeholder feedback.

"The topic of cost and charges for processing payments is an evergreen one and what is needed is a nuanced approach to this area which reflects the realities of an increasingly specialised digital payments world. While banking has traditionally been a portfolio-based business where income for one set of services potentially compensates for the lack of income from other services, being able to move to a model of charging for each service independently for what it is really worth will lead to a more efficient banking system overall and will help consumers eventually. This discussion paper is a good move in that direction", added Prasad.

The RBI's discussion paper covers all aspects relating to charges in payment systems, such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, Real Time Gross Settlement (RTGS) system and Unified Payments Interface (UPI)] and various payment instruments [such as debit cards, credit cards and Prepaid Payment Instruments (PPIs), etc. The feedback received would be used to guide policies and intervention strategies.

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