Govt limits charges on electronic fund transfer
Finance ministry said banks should not charge fees for transactions settled on IMPS and UPI in excess of rates charged for NEFT for transactions above Rs1,000
New Delhi: In an attempt to further encourage digital payments, public sector banks (PSBs) have been directed to reduce their fees for transactions above Rs1,000 settled through various digital modes till 31 March 2017, the finance ministry said on Wednesday.
PSBs have been told not to 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 Rs1,000, with service tax being charged at actual.
A further discount of Rs0.5 will be applicable for transactions above Rs1,000, carried out through Unstructured Supplementary Service Data (USSD) on these rates.
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USSD is the *99# service which is hosted by the National Payments Corporation of India (NPCI) and is being promoted by the government for payments in rural areas as it does not need smart phones or internet connectivity. The multi-lingual service serves an integral medium of financial inclusion.
Last week, the Reserve Bank of India instructed banks as well as prepaid payments instrument companies to not levy any charge on customers for transactions up to Rs1,000 done through USSD, IMPS or UPI.
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It also announced reduced merchant discount rates (MDRs) or the commission charged by the bank that provides the necessary infrastructure to the merchant to accept payments using cards for card payments below Rs2,000.
Both these measures are valid from 1 January to 31 March 2017.
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