MUMBAI (Reuters) – Global card payments group Visa, has been critical of the Indian government’s decision to encourage the adoption of electronic payments and the obligation of the banks and card payment networks to offer a no-fee debit card transactions), a senior Mastercard executive has said.
FILE PHOTO: A Visa credit card is available to be seen on a computer keyboard in this photo illustration, September 6, 2017. REUTERS/Philippe Wojazer/File Photo
Last month, India’s Minister for Finance, Nirmala Sitharaman said that the companies with an annual turnover of 500 million rupees non-payment of the merchant discount rate on debit card and any other digital modes of operations, with the exception of the use of credit cards.
The rebate will be paid by the merchant to the banks and card-payment networks and other financial intermediaries for the handling of digital transactions. For debit cards, the cost is usually between 0.40% and 0.80%, of the total amount of the transaction, according to industry officials.
“I think the logic is a little bit misleading, because it is cost-free … I am a big fan of low economic activity, but is not a student of economics you can believe in, in any economy,” by T. R. Ramachandran, Visa India and South Asia head said on Monday, speaking on a panel at a conference.
Ramachandran said that the government is the dealer and the consumer, all to save on the cost of cash payment through an electronic payment mechanism, the stakeholders have to be adequately compensated.
The indian Finance Ministry wasn’t immediately available for comment on the issue of out-of-hours.
Sitharaman had said in her budget speech that the Reserve Bank of India and banks have to take those costs out of the savings that will be of benefit to them, at the expense of working on less money, as people are moving to digital payments.
But industry officials say there is still a lack of clarity as to who will pick up the tab.
The no-fee debit cards, a plan might be able to get the fee and commission income of the banks, which are already saddled with non-performing loans of approximately $150 million.
As of May of this year, there were 824.9 million credit cards in circulation in India, compared to 48.9 million credit cards, according to the Reserve Bank of India.
Reporting Nupur Anand.; Edited by Euan Rocha and Jane Merriman