Banks to Lower Charges on Digital Payments Above Rs 1,000

The directive did not specify from when these new charges would apply.

Banks have been asked to lower the charges for various forms of electronic payments. (Photo: iStockphoto)

In a bid to encourage digital transactions, the government on Wednesday asked all public sector banks to lower the charges for the various forms of electronic payments up to 31 March 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. 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.

Official government statement

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 31 March 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 1 January 2017 and 31 March 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.