The Reserve Bank of India (RBI) has urged payment system operators (PSOs) to move to a marginal cost method based on the volume of transactions for better pricing of services and pass on the benefits of lower costs achieved through digitisation of payments to customers.
"The savings achieved at all levels on account of digitisation of payments need to be considered in the pricing of these services to the end customers. PSOs need to consider the cost of accessing and managing transactions and accordingly price their services," the RBI said, adding that the aim is to reduce ‘per-transaction' cost to customers keeping in view the marginal cost advantage with an increase in the number of transactions.
RBI's view holds significance these days as consumers are charged a fee for digital payments for some transactions. For instance, a hefty "convenience fee" is charged on the purchase of movie tickets through online channels.
On May 15, the RBI released its vision statement for payment systems in India for 2019-21. In the statement, RBI said cash entails a significant cost to the whole economic system, including consumers.
"Migration to digital modes of making a payment can obviate some of these costs and can give customers a friction-free and enjoyable experience. Giving them multiple options is expected to make this experience exceptional, apart from furthering growth measurable in terms of digital payments turnover to GDP," the central bank added.
While RBI did not specify a target for cash in circulation, it said the enhanced availability of Point-of-sales (PoS) infrastructure is expected to reduce demand for cash and thus over time achieve a reduction in cash in circulation as a percentage of GDP.
The banking regulator expects the digital payment transaction turnover vis-à-vis GDP (at market prices-current price) to increase to 10.37 in 2019, 12.29 in 2020 and 14.80 in 2021. RBI also expects 5 million active PoS by end 2021 and digital PoS (QR code) to increase substantially. The total card acceptance infrastructure is likely to multiply six times the current levels by the end of 2021.
The RBI will also look at setting up a self-regulatory governance framework to keep a check on security, customer protection and pricing. "Such an organisation can be constituted to cover the entire gamut of digital PSOs, including retail products of National Payments Corporation of India (NPCI). The SRO will serve as a two-way communication channel between the players and the regulator or supervisor. The SRO will of course work towards establishing minimum benchmarks, standards and help discipline rogue behaviour," RBI said.
Source: moneycontrol.com