Banks to cut charges on digital payments above Rs 1,000, says govtAs part of its ongoing efforts to promote digital transactions in the country, the government on Wednesday asked all public sector banks to bring down the charges for different types of electronic payments up to
As part of its ongoing efforts to promote digital transactions in the country, the government on Wednesday asked all public sector banks to bring down the charges for different types of electronic payments up to March 31, 2017.
"In order to further promote digital and card payments, the Department of Financial Services, Ministry of Finance has issued a direction in public interest to all public sector banks,” a government statement read.
"In accordance with which these banks shall not charge fees for transactions settled on Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above Rs 1,000, with service tax being charged at actuals," it added.
Though the government's directive did not specify from when these new charges would apply, it said these would apply for all transactions up to March 31, 2017.
"For Unstructured Supplementary Service Data (USSD) transactions above Rs 1,000, a further discount of 50 paise on these rates shall apply," the statement added.
The Reserve Bank of India last week instructed banks to remove all charges on customers for transactions up to Rs 1,000 settled on IMPS, USSD or UPI systems between January 1, 2017 and March 31, 2017.
The RBI has also rationalised the Merchant Discount Rate (MDR) for debit card transactions up to Rs 2,000 over the same time period.
A committee of chief ministers formed to suggest ways to foster digital payment systems in the backdrop of demonetization has also called for a further slashing of card transactions to encourage people to take to digital payments. The panel, led by Andhra Pradesh Chief Minister Chandrababau Naidu, had observed that recent decisions on slashing charges on card transactions announced by the Reserve Bank of India were not enough to boost digital payments in the country.
The panel suggested that the merchant deposit rate (MDR) be cut to 30 paise for transactions up to Rs 100 and a maximum of Rs 10 for transactions above Rs 2,000 to encourage payments using debit and credit cards.
(With inputs from IANS)