On January 10, the National Payments Corporation of India (NPCI) paved the way for international (phone) numbers to be able to transact using UPI. A day later, the Union Cabinet approved an incentive scheme for the promotion of RuPay debit Cards and low-value BHIM-UPI transactions (person-to-merchant) in FY 2022-23. The scheme has an outlay of ₹2,600 crore.

What about international numbers?

  • In a nutshell, non-resident accounts such as non-resident external accounts (NRE) and non-resident ordinary accounts (NRO), having international numbers, will now be allowed into the UPI payment system.
  • The NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.
  • NRE accounts are those used by non-residents to transfer earnings from foreign soil to India while NRO accounts are used to manage income earned in India by non-residents.
  • These incomes could be rent, interest, pension, among other things. At present, users from ten countries will be able to avail the facility— Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.
  • Deep Agrawal, Head of Payments at online payment app PhonePe, told The Hindu that the development would allow NRIs to use the payment method for making utility bill payments for their families (or themselves) in India, make purchases from e-commerce or online platforms and make payments to physical merchants who accept UPI QR based payments when they travel to India.
  • Addressing the infrastructural and technological changes required to support such payments, he said, “Currently, all the internal systems as well as ecosystem players such as banks, NPCI, etc only understand India-based mobile numbers for UPI transactions. With this enablement, a significant number of systems will need to start understanding the same.”

What is the discussion on MDR?

  • The Merchant Discount Rate (MDR) is the charge recovered by the acquirer from the final recipient of the payment, that is, the merchant.
  • It is collected by the acquirer to compensate the varied service providers and intermediaries in the payment system.
  • Presently, there is no MDR charge levied for RuPay-based debit card and UPI transactions. Stakeholders are hence concerned over cost recovery for the services they provide. In August 2022, the Finance Ministry tweeted that it was not planning to levy any charges for UPI services, adding, “The concerns of the service providers for cost recovery have to be met through other means.”
  • The Reserve Bank of India (RBI) and varied stakeholders expressed concerns about the potential adverse impact of the zero MDR regime on the growth of the digital payments’ ecosystem.
  • The NPCI requested the incentivisation of BHIM-UPI and RuPay debit card transactions to create “cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.”

Where does UPI stand now?

  • As of latest available data, 6,779.6 million transactions worth about ₹10.95 lakh crore have been facilitated using UPI.
  • In the previous calendar year, excluding one month of fall (between January and February), UPI transactions have been on an upward trajectory.
  • As per the DigiDhan dashboard maintained by the Ministry of Electronics and Information Technology, BHIM-UPI accounted for 52% of all digital payments in FY 2021-22. At present, it stands at 59.74%.


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