The Centre has clarified that the decision on UPI MDR (merchant discount rate) will be implemented from October 15 and there will be no roll-back.
The Reserve Bank of India has described the decision as a good one. It said, this will help to make the digital payment system in India more secure and sustainable. RBI clarified that common people and small traders will not have to pay UPI charges. Only four per cent big traders will have to pay a nominal 0.4 pc merchant discount rate.
RBI has said, collection of merchant discount rate on high-value UPI transactions will help in providing new facilities for customers and traders and the losses incurred by payment companies will come down. Banks are happy, digital service provider companies are happy, the common man on the street is not against this charge, and big traders have not yet criticized MDR, but Congress leaders have described this as a conspiracy to finish off free digital transactions.
In his social media message, Rahul Gandhi asked Prime Minister Modi to roll back, what he called, the ‘UPI tax’. Union Minister Jyotiraditya Scindia lashed out at Rahul. He said, Rahul Gandhi is unable to think logically, and he has this habit of showing India in a poor light on every issue and occasion. People have now stopped to take his words seriously, he said.
Two main questions are being asked about UPI: One, Will it make any difference to the common man and small traders? Two, what was the reason behind levying 4 pc on high-value digital transactions? Let me explain. 98 percent of digital payment users will not have to pay any charge. The remaining 4 per cent will have to pay 0.4% MDR.
About the second question. India’s UPI is the world’s biggest digital payment platform. Last year, UPI handled 24,161 crore transactions involving Rs 314 lakh crore business. This is not enough. A large proportion of our people are still out of the purview of digital payments.
Many people still buy goods in cash. If we want to end the cash economy drastically, we will have to make the UPI system strong and reliable, we will have to beef up cyber security, service provider banks will have to opt for advanced technology. For adding new customers to UPI, banking and digital service providers will have travel to far-off villages.
In short, capital will have to be invested both at the front-end and back-end. The charge that is being levied on 4% big merchants will help UPI expand to millions of people. Hence, it is useless to say that levying of charge will result in decline in digital transactions.
Did Houthis attack Holy Mecca?
In latest reports, Houthi rebels yesterday shot down an F-15 fighter plane of Saudi Air Force and displayed its parts with army insignia proudly.
This comes after several days of severe pounding of Houthi strongholds by Saudi air force planes. Hundreds of fear-stricken Yemenis are fleeing the country by boats. Houthi rebels attacked several Saudi installations with missiles and drones. The sudden surge in Gulf War has led to international crude price touching $110 per barrel.
On Tuesday, Houthis sent a drone to attack Islam’s holiest city of Mecca, with sirens blaring throughout the night. The drone was shot down by Saudi defence forces. Houthi commanders have denied attacking Mecca. They alleged this was part of Saudi propaganda.
Already, Houthis have occupied large chunks of northern Yemen and have advanced to several Saudi coastal towns in the Red Sea. Shipping through Bab el-Mandeb in Red Sea have come to a standstill. Neither is the US ready to help Saudi Arabia, nor is Pakistan ready to pitch in since it has signed the Mecca pact with Saudis and Turkiye.
What will Saudi Arabia do now? Will Israel provide protection to Saudis? Houthis claim, they have occupied two ports in Yemen and the Saudi-backed government Yemeni army has fled the cities. Houthi rebels have occupied all tanks, weapons and armored vehicles that were given to Yemeni Army by Saudi Arabia.
Saudi Arabia is worried over the fast advance of Houthi rebels. It has stopped loading of crude at Yanbu port and the undersea pipelines have been closed. No concrete evidence has come forth about Houthis attacking Holy Mecca city. If it is proved that they sent the drone, they will have to face the wrath of Islamic world.
8.7 per cent of world sea trade passed through Bab el-Mandeb strait. If Houthis take control of this strait, the world will be thrown into another oil crisis. In the last 10 days, crude prices of OPEC countries have shot up from $78 to $124 per barrel.
If the situation does not improve, prices of oil and gas will spiral. The entire world will have to face the consequences of this Saudi-Houthi conflict.