Divide On Digital Transaction

As debate rages on whether to charge digital transactions, experts feel there is a need to incentivise these platforms

- Rajat Mishra

There has been a shift from cash to digital payments during the pandemic since it is both simple and safe.

However, the Central Board of Direct Taxes (CBDT) has recently barred banks from charging fees for using digital payment gateways like Unified Payment Interface (UPI). CBDT has also asked them to refund what has already been charged since January 2020. It has intensified a debate of sorts where industry, fintech, banks, and the government have their justifications.

Recently, Paytm imposed a 2 per cent fee on amounts added to e-wallets through credit cards. Users earlier paid that fee if they loaded more than ₹10,000. A message - “Please use UPI or debit card to add money for free” – is displayed when users try to add money via credit cards to their e-wallets.

According to Paytm’s spokesperson, this nominal charge is applicable since the company pays a fee to banks and credit card companies for loading money on to e-wallets. For other sources like UPI or debit cards, they absorb the cost. “The 2 per cent charge is passed on to customers,” the spokesperson says.

Large private banks like HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank have been levying charges on UPI payments over 20 transactions every month. This is still happening, although the finance ministry, in August, advised banks against imposing any such charges on digital transactions or payments, irrespective of the number.