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Digital payment costs are a hindrance


The Hindu

Context

Article lists the views of the TRAI chief that he expressed during the India Digital summit hosted by the Internet and Mobile Association of India

Views

  • The surge in digital payments in the country, driven largely by short-term incentives, will become sustainable if the costs of making such payments are addressed
  • No cost for cash: Everyone can provide incentives in the short run and see a rise and once those incentives go, they will decline. What is important from a citizen’s perspective is that cash doesn’t have any costs. If I have ₹100 in my pocket, I get ₹100 worth of goods. But if I have to pay somebody ₹1 or ₹2 for paying the same digitally, it’s not fair
  • Issue of cost: Digital financial transactions are not sustainable unless you address the issues of cost, convenience and confidence
  • Referring to the merchant discount rate (MDR) levied on transactions done through credit and debit cards, TRAI chief said there is no relationship between the charges and the ‘work done’ to justify them.
    • Drawing a parallel with the telecom sector, the regulator drew attention to ‘the work done principle’ used to determine how much one operator pays another as termination charges.
  • Building confidence: While people are getting more comfortable with digital payments, the TRAI chief said it is important to build confidence in the systems and ensure that all relevant software is tested for cyber-security and other security risks.
  • Reduced charges: The regulator has reduced the charges of USSD (Unstructured Supplementary Service Data)-based payments made on mobile phones.

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