Comment by mrngld
21 hours ago
Sounds bogus, there's free payment services in the US as well, that's nothing special. What makes more sense in the India context is low value of volume per customer where even the minimal operating costs are difficult to cover. I say that from some amount of experience in the micro-finance world, where even money provided at zero actual interest in terms of the loaned money itself still ended up having to have somewhat painful interest rates just to cover true costs in low income countries.
I do not know a single free payment service in the US outside Zelle and that is not really comparable to India's UPI.
Are you saying that there are services in the US that I can use to accept payments as easily as a credit card with no fees on me as a merchant?
UPI costs about $500 million per year to the Indian government while having a transaction volume of $3.4 trillion per year. That is < 0.001 % of the transaction volume.
I am not going to claim there is no subsidization to the cost to the government by the banks as they get to keep control over the flow of money and that might change in the future but for now the costs to the government vs benefit to the Indian economy is fairly clear to me.
Just the 18% GST returns on the 2.5% extra the merchants would receive when a user pays with UPI over VISA would more than make up for the cost to the government. Not to mention all the cash income that was impossible to track before is now tracked under UPI.