Digital payment costs are a hindrance: TRAI

Transactions will drop once incentives go, says Sharma

February 09, 2017 12:00 am | Updated 12:00 am IST - NEW DELHI:

The issues of cost, convenience and confidence must be addressed.

The issues of cost, convenience and confidence must be addressed.

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, said Ram Sewak Sharma, chairman, Telecom Regulatory Authority of India (TRAI).

“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,” Mr. Sharma said on Wednesday.

Issue of cost

“Digital financial transactions are not sustainable unless you address the issues of cost, convenience and confidence,” the TRAI chief said at the India Digital summit hosted by the Internet and Mobile Association of India.

Referring to the merchant discount rate (MDR) levied on transactions done through credit and debit cards, Mr.Sharma said there is no relationship between the charges and the ‘work done’ to justify them.

“The work at the back-end is almost zero… You are just making some entry into some database that Mr.X transferred some amount to Mr Y. That’s only an entry. No work’s being done,” he said.

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.

“This is computed on the basis of work done. What we are charging in the name of MDR and so on, is not really on the basis of work done. This is an issue that has to be addressed,” Mr. Sharma emphasised.

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.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.