- 20 minutes ago
A debate on the proposed merchant discount rate (MDR) levy on Unified Payments Interface (UPI) transactions above Rs 2,000 sparked sharp exchanges between BJP National Spokesperson Sanju Verma, Congress National Spokesperson Brijesh Kalappa, and economist Deepanshu Mohan. Defending the move, Sanju Verma argued that UPI remains free for peer-to-peer and sub-Rs 2,000 payments, noting that '96% of UPI transactions are below the rupee 2,000 category, which is completely free' with fees capped at Rs 300 for higher merchant transactions. Brijesh Kalappa countered that the levy encourages system dishonesty and burdens common users, calling it counterproductive to digital adoption. Professor Deepanshu Mohan cautioned that the policy undermines UPI's character as a digital public good and functions as an indirect consumption tax that could drive users back to cash. Verma dismissed the criticism, arguing UPI remains far more affordable than commercial credit cards.
Category
🗞
NewsTranscript
00:00The Aam Adhmi, you and me, will not be burdened is the big takeaway here.
00:04But as expected, politics is playing out on this issue.
00:09Let's bring in the politicians on the program tonight.
00:12Sanju Verma, National Spokesperson of the BJP, is joining me.
00:15Rijesh Kalappa, National Spokesperson of the Congress, is on the show.
00:18And we also have Dipanshu Mohan, Professor and Dean,
00:21Jindal Global University and also Visiting Professor at LSE and Oxford.
00:26Ms. Sanju Verma, let me begin with you.
00:27Why was the country told that UPI will stay free if a merchant fee was already being designed?
00:34You know, let's get one thing very clear.
00:37UPI has been in existence for barely 10 years.
00:40It came about in 2016.
00:43And at the very outset, the National Payments Corporation of India, the NPCI and the RBI,
00:49if you read the guidelines,
00:51UPI was set up to ensure that the micro-payments and small-payments system is not compromised.
01:00People who are small traders, small businessmen, individuals who transact,
01:05you know, maybe on a daily basis for 30 rupees, 300 rupees, 500 rupees,
01:11these are the kind of people who can transact online.
01:14They can transact digitally without having to own a visa or a MasterCard.
01:21The limiting point is simply this.
01:23And I want to say this on your show, with no ifs or buts, I did not hope that my
01:28punches.
01:30Ashneel Grover and the entire cabal that is rooted, you know, in deception,
01:36and is rooted for the likes of Ashneel Grover.
01:39They say, are they having a surplus of 2.5 lakh crores?
01:44It gave the government dividend of more than 2 lakh crores.
01:46Then what is the need for ensuring that there is an MDR levy of 0.4%?
01:51So, very quickly, point number one, P2P, person-to-person, peer-to-peer,
01:57people-to-people transaction is completely free,
02:00irrespective of whether you are transacting for 2,000 rupees or 2 lakh rupees.
02:04The, you know, big controversy has come around because now the government says
02:09that there is 0.4% levy on transaction above rupees 2,000.
02:14But please understand, Mariya, even if you transact beyond rupees 2,000,
02:20and it's a person-to-merchant transaction,
02:23in that case, the fees per transaction is capped at 300 rupees.
02:30So, assume I've done a transaction of 1 lakh rupees, a P2N transaction.
02:36At 0.4%, I would need to pay 400 rupees.
02:41But the government says it is capped at 300 rupees.
02:45Now, imagine you do a 1 lakh transaction via visa.
02:49Visa debit card.
02:50The debit card charges are 1.5% in the lease,
02:55which means if I do a 1 lakh transaction via a visa debit card,
02:59I'll have to pay at least 1,500 rupees.
03:01And if I do a transaction of 1 lakh rupees via a visa credit card,
03:07I may have to pay 3 to 4%.
03:093% means on that 1 lakh transaction,
03:12I will have to pay 3,000 rupees additionally.
03:14Okay.
03:15A 4% fee...
03:16That's very well explained, Ms. Varma.
03:18Let me bring in Brijesh Kalappa now.
03:20Person-to-person is free.
03:23Under 2,000 is free.
03:25Small QR merchants under 1 lakh rupees a month are free.
03:32Then, Brijesh Kalappa, where is the tax on the aamadmi in this text?
03:41See, Maria, supposing I were to go to a shop
03:44and I were to transact business with the shopkeeper.
03:47Shopkeeper himself has UPI, right?
03:50And he runs a small Kirana shop
03:53and I'm buying goods beyond 2,000 rupees.
03:57So what would he say, Maria?
03:59He would say, okay, put it to my personal account.
04:02So first thing is you're encouraging dishonesty
04:05when you have levied such a huge kind of charges
04:13in regard to this, in regard to UPI,
04:16which was never in the first place contemplated.
04:19So the first thing is you're infusing a sense of dishonesty.
04:24The very purpose of having UPI was to cleanse the system,
04:29to make it more transparent, right?
04:30What are you doing?
04:32You're infusing dishonesty to the entire system
04:35because otherwise, supposing he says that
04:37you send it to my shop's account,
04:39then the 2,000 rupees is chargeable.
04:42Therefore, he will say put it on my personal account.
04:44So this is the first aspect.
04:46And this happens across the board, right?
04:48First part.
04:49Second part is we are now speaking of a 7.8% GDP growth.
04:56On the one hand, we are doing phenomenally well, right?
05:00On the other hand, share markets are falling.
05:03We are supposed to be the worst share market in the entire, you know, in Asia.
05:09Now, given this scenario, Prime Minister comes out and says,
05:15don't buy gold.
05:16He says, on the second part, he says, don't travel abroad.
05:20If you are doing so phenomenally well, right?
05:24Why are all these restrictions being placed?
05:27One.
05:27Two.
05:28And what is this chindichori?
05:31On...
05:31First, you bring about UPI.
05:34You make it something which is laudable,
05:36which is extraordinarily good for the people.
05:38You know, you cleanse the system of, you know, the cash part.
05:43You have...
05:44First, you have your demonetization,
05:46then you bring UPI,
05:47so that you strike against the root of black money.
05:55I am going to come back to you.
05:57Sanjeev Verma, I'll make you respond to this.
05:59I'll make you respond to this.
06:03But before that, let me bring in Dipanshu Mohan.
06:06I want to understand.
06:07Sir, you have made your point.
06:09You have made your point,
06:10because you have made a couple of points
06:11and that need clarification.
06:13And perhaps Professor Dipanshu Mohan
06:16will be able to explain this to us better.
06:18You heard what the Congress Party's argument is,
06:21that if the larger idea of UPI
06:24was to ensure that, you know,
06:29the demonetization was brought in,
06:31the corruption had to be done away with,
06:33direct payment transfer was the big idea.
06:36Of course, the country's payment system
06:40has been lauded by one and all.
06:42And I'm, you know, as an Indian,
06:44I'm extremely proud of the fact that
06:46we pay to every Kirana store,
06:49every Thelawala that we meet now.
06:51So that is what we are looking at.
06:52But if the government looks at,
06:57you know, a very, very minimal,
06:59nominal amount of this nature,
07:02is the criticism justified?
07:05Okay, so thanks a lot for having me here, Maria.
07:08Just, I think let's put a couple of things
07:11in perspective here.
07:13First of all, with the imposition of this charge
07:16that the government has sort of notified,
07:20UPI no longer exists as a digital public good.
07:24This is important because a lot of transitional changes
07:29in payment systems have happened.
07:30A lot of people, especially the urban middle class
07:33and upper middle class,
07:36had stopped using cash-based wallet systems.
07:39People are likely to come back to that.
07:42Cash will be back as a larger preferred mode of payment
07:45for larger denominations.
07:47To me, the logic of imposition of this tax
07:50is, from an economic standpoint, counterintuitive
07:54because most of the merchants
07:58who know now that over $2,000,
08:00you have to charge a particular fee
08:03would ask for payments to be made
08:06either in multiple denominations of less than $2,000,
08:10which imposes a higher operational cost on the system.
08:16And I think that has to be understood
08:18because a lot of the conversation
08:20that has been happening throughout the day
08:22is that, oh, the operational dynamics
08:24of having a digital public infrastructure requires money.
08:28We need that money to be funded.
08:29So this charge is justified.
08:32So that cost of the operational dynamics
08:35of the system will be under more stress.
08:37People will make more 90-90 denomination payments.
08:41And that's where things get counterintuitive.
08:43The other thing is, this is a consumption tax,
08:45which means that it will affect, as an indirect payment,
08:50the low-income groups in the worst possible way.
08:53For the simple reason, MSMEs or any enterprise
08:57which otherwise was very happy,
08:59in fact, much of our informal sector right now,
09:03even a woman who's selling or taking arms as a beggar
09:07is accepting UPI payments in cities.
09:10There is an enormous reliance on this system,
09:14which I think made some Cader-based economic bureaucrat
09:20to advocate that because of the payment overload,
09:24it is okay to expand the tax base.
09:26And my sense is, as a tax,
09:29every tax system has basic affirmative principles.
09:32There is some principle of equity, fairness,
09:36simplicity, neutrality.
09:37This belies all of these logics.
09:40They're more anti-cannons.
09:41And the only logic I can see soundly
09:44that can be justified imposing a charge
09:45is that the government is fiscally right now
09:49in a struggle spot.
09:50The timing of this is very revealing
09:52because we are sort of halfway through the budget year.
09:57The peak of the consumption cycle is the festive season.
10:01So the timing of the imposition of this charge
10:04is 15th October onwards.
10:06So that is when the consumption payments
10:08are at the highest peak in the whole year.
10:10And as a result of that,
10:12you would expect the government wants to maximize revenue
10:15because a lot of its other subsidies are going very high.
10:19Fuel subsidies and fertilizer subsidies
10:21because of the gestation crisis
10:22and oil prices have gone up.
10:26Deepanshu, let's bring in Sanju Varma now.
10:29Please, Sanju Varma, go ahead.
10:31You know, I'm appalled.
10:32I'm appalled to see that somebody as educated
10:35as Deepanshu Mohan is sitting here
10:38and has the audacity to say
10:40that UPI is not public good.
10:43Point number one.
10:4396% of UPI transactions are below the Rupees 2000 category,
10:50which is completely free.
10:51So is it a free public good?
10:53Yes.
10:5486% of UPI transactions are for transactions below this 500.
11:00So does it help small Kiranawali and your maid
11:05or, you know, a small-time vendor?
11:07Oh, yes.
11:08Does that make UPI a public good,
11:10which is completely free?
11:11Yes.
11:12It is only 4% of the transactions,
11:15which are in the over Rupees 2000 category.
11:18And again, very quickly,
11:21Mr. Deepanshu Mohan,
11:23do you have a Visa card?
11:24If you were to spend 1,000 rupees on your Visa debit card,
11:29you would be charged at least 1,000 rupees extra.
11:33If you were to use your Visa credit card
11:36on that 1,000 rupees expenditure,
11:39you would be charged at least an additional 3,000 rupees,
11:43assuming the credit card charges are 3%.
11:46Now in UPI,
11:48suppose I make a transaction with a merchant
11:51for 3,000 rupees.
11:53The MDR merchant discount rate is 0.4%,
11:58which means I will have to pay the merchant
12:00an additional 12 rupees.
12:03Suppose I do a transaction with a merchant
12:06using my UPI for 4,000 rupees.
12:09I will have to pay in absolute terms
12:11an MDR of 1616 rupees,
12:14assuming 0.4% as the MDR rate.
12:17If the transaction is worth 5,000 rupees with a merchant,
12:21I will have to pay only 20 rupees additional,
12:24assuming a 0.4% MDR.
12:27So you are saying,
12:29by paying 12 rupees more,
12:31I am harming a small vendor?
12:34In which world are you living in?
12:35And by the way,
12:37let me tell you,
12:38if you use a Rupay debit card
12:40which rides on UPI,
12:42you pay 0 MDR.
12:45If you use a Rupay credit card,
12:48which also rides on UPI,
12:51you end up paying almost next to nothing.
12:54You don't want to use UPI,
12:56you don't want to use Rupay debit card,
12:58you don't want to use Rupay credit card,
13:01where you end up paying nothing by way of MDR.
13:05But you want to use Visa and MasterCard,
13:07you're sharing 3% to 4% over and above
13:10what your actual payment outgo is.
13:13You've never complained about Visa.
13:15You've never complained about MasterCard.
13:17So this is hypocrisy at its worst.
13:19And my final point is this.
13:21There are four charges.
13:23Your customers,
13:24your clients,
13:25your audience,
13:26everybody gets to hear this,
13:27Maria.
13:28When we use a debit card or a credit card,
13:31you pay one thing called the banking charge.
13:34You pay a second thing called
13:36the merchant discount rate.
13:38There's a third payment which you make,
13:40which is called the processing fees.
13:43And there's a fourth payment which you make,
13:45which is called the network assessment fees.
13:49But when you use UPI,
13:51by and large for 96% of the transactions,
13:54you don't pay a banking charge,
13:56you don't pay an NDR charge,
13:58you don't pay a processing fee,
14:00and you don't pay a network assessment fee.
14:02I'll bring in British Kalappa,
14:04Ms. Verma.
14:05Because one of the points that has been made repeatedly
14:07by the Congress Party is surrender to the U.S.
14:10Help us understand,
14:12which American demand does 0.4%
14:14on an Indian mall bill really satisfy?
14:21First is,
14:22I don't think it's appropriate for any spokesperson
14:26belonging to any political party
14:28to come down on a neutral person
14:31who comes on a debate
14:32and speaks his mind.
14:34I don't think it's correct.
14:36I don't know him at all.
14:40I've never met him.
14:42Okay, okay.
14:42Ms. Verma, please let him finish his point.
14:44We have never done that.
14:45If that's the BJP style,
14:47it's all right.
14:48Please let him speak.
14:50Sanju Verma, let him speak, please.
14:52Yes, go ahead.
14:56Second part is,
14:58Maria,
14:58what the BJP spokesperson spoke about
15:03comparing UPI to a credit card
15:06and said,
15:06if you use your visa card,
15:08if you use your master card,
15:11when you approach the bank
15:14for a...
15:15One minute, madam.
15:16Your boss, Ramadhan, will you?
15:19Is she going to continue to interrupt?
15:21Maria, is she going to continue to interrupt?
15:24Then I think she should have a say.
15:26She can come as a government spokesperson
15:28and then fill the television
15:30with all whatever she wants to say.
15:32What's the point of having all of us?
15:34Go ahead.
15:35Yeah, so the point is
15:37that when you enroll for a card,
15:40you know clearly
15:41that these are the terms of the card, right?
15:44You know clearly
15:45that when you go for a visa card,
15:48you go for a master card
15:49and this is not something
15:50which is, you know,
15:52crept onto you.
15:53This is not something
15:54which is stealthily,
15:56you know, pushed onto you.
15:57You knew for a fact
15:59that when you enrolled for a card,
16:01these were going to be the charges.
16:03Today, to compare UPI,
16:05which was absolutely free,
16:07first, you wean people into the UPI,
16:11then you make it that,
16:13look, you guys have to pay for this.
16:14This is just like you're, you know,
16:16having a charge for your...
16:18for maintaining a bank account.
16:20Yes, but...
16:21The government is done exactly this.
16:23And this is why the consumer feels...
16:25Dipanshu had some concerns there.
16:29Dipanshu, if you look at the numbers,
16:3296% of the transactions stay free.
16:35A large share of value
16:36will now carry 0.4%.
16:38Then what really is the concern?
16:41No, so I don't know where
16:43the 96% number...
16:45Because if you look at
16:46the volume of transactions,
16:48a lot of the payments
16:49that are being made
16:49by share volume
16:50are much more.
16:53Clearly, it is likely
16:54that a lot of the large payments
16:56that UPI was being used for
16:58are no longer going to be made
16:59that easily without a charge.
17:01And it's fine.
17:01I mean, see, that's...
17:02It's completely okay
17:03to have a taxation system introduced
17:06and say, let's call what it is.
17:08It's a consumption tax.
17:09Like you were using a credit card,
17:11you were using a debit card,
17:12now you have to use UPI.
17:14But what was the rationale
17:15of bringing UPI in?
17:16You wanted a sort of
17:18an ease of payment standard.
17:20You wanted to move away from cash,
17:23which is what all the justification
17:25was of financial inclusion.
17:26All of that worked.
17:28This is almost a geo-data model.
17:30Get everything for free.
17:32Get all subscriber data.
17:33And as much as now,
17:34then move to charging people
17:36for per-unit cost.
17:38And I cannot,
17:39for the reason of anything,
17:41understand what is the rationale.
17:42Unless and until
17:43if there was any cost
17:45that the government was incurring,
17:46it wants to cross-subsidize that,
17:48number one.
17:49Number two,
17:49there was a heavy merchant
17:51or commercial bank interest lobby
17:52which has pushed for this.
17:54I mean, there is...
17:55That could be the only other reason.
17:56We don't know.
17:57I mean, there's a government...
17:58So, let me...
17:59Just...
17:59Sorry, one more point.
18:01One more point.
18:02The other thing you have to put in perspective is
18:05as per the aggregate tax revenue
18:07that India collects,
18:08the government collects,
18:10direct tax accounts for less than 40%.
18:12All of our tax revenue
18:14is indirect tax driven.
18:16If the government has so much of concern
18:18of its fiscal capacity,
18:21why not tax for a wealth tax?
18:22Okay.
18:23I have just enough time
18:24for Sanjeev Verma's last word.
18:26Please go ahead, Sanjeev Verma.
18:27You know, I would like to educate
18:29Mr. Deepanshu Mohan.
18:31UPI is the world's largest
18:32digital payment interface
18:35and it is not a consumption tax.
18:37I think you need to go and relearn
18:39and learn about economics as well.
18:41So, please don't sit here
18:42and, you know,
18:43speak rhetoric.
18:44Speak hard facts.
18:45I fail to understand, Mariya,
18:48if 4% of the digital transactions
18:52via UPI
18:53are going to be taxed
18:55and that too there is a cap
18:56of 300 rupees per transaction.
19:00Why the big bhala balu?
19:02This is like storm in a teeka.
19:04It is like saying that,
19:06oh, you know,
19:07GSTK worked when they went in
19:08for two slams.
19:095% and 18% people said,
19:12oh, the seller will finally
19:14push the GST burden
19:15to the consumer,
19:16but that did not happen.
19:18And my final point is this.
19:2155 crore people in India
19:24use UPI.
19:25There have not even been
19:26five complaints.
19:28Five and a half crore merchants
19:30use UPI.
19:31There have not even been
19:32five and a half complaints.
19:347 here in 41 lines
19:36that use UPI,
19:38they have not complained.
19:395-0-50% of global financial transactions
19:43happen via UPI.
19:45From Emmanuel Macron
19:47to the crown prince of UAE
19:49to the Singapore head of government
19:52have lauded UPI
19:53as the world's biggest innovation
19:56in terms of digital public infrastructure.
19:59But Dipanshu Mohan says,
20:01UPI,
20:02the 0.4% MDR,
20:06is a consumption tax
20:07which the government wants to use
20:09for cross-subsidizing
20:11its welfare program.
20:12Mr Dipanshu Mohan,
20:14please say
20:15you're anti-establishment
20:17but please don't stop
20:18using your common sense
20:20because UPI
20:21is a free policy.
20:22We have really come to the end
20:23of this discussion now.
20:25Sanju Verma,
20:26I appreciate your time.
20:27Thank you for joining us.
20:28Thank you to Brijesh Kalapa
20:30for his time
20:30and also to Professor Dipanshu Mohan
20:32for this conversation.
Comments