Visa critical of India's move towards no-fee debit card transactions

By Nupur Anand MUMBAI (Reuters) - Global card payments group Visa is critical of the Indian government's decision to boost adoption of electronic payments by requiring banks and card payment networks to offer no-fee debit card transactions, a senior Visa executive said. Last month, India's Finance Minister Nirmala Sitharaman said that businesses with annual turnover of 500 million rupees will not have to pay a merchant discount rate on debit card and other digital modes of transactions, excluding credit cards. The discount rate is paid by the merchant to banks, card payment networks, and other financial intermediaries for handling a digital transaction.

Reuters August 20, 2019 03:05:08 IST
Visa critical of India's move towards no-fee debit card transactions

Visa critical of Indias move towards nofee debit card transactions

By Nupur Anand

MUMBAI (Reuters) - Global card payments group Visa is critical of the Indian government's decision to boost adoption of electronic payments by requiring banks and card payment networks to offer no-fee debit card transactions, a senior Visa executive said.

Last month, India's Finance Minister Nirmala Sitharaman said that businesses with annual turnover of 500 million rupees will not have to pay a merchant discount rate on debit card and other digital modes of transactions, excluding credit cards.

The discount rate is paid by the merchant to banks, card payment networks, and other financial intermediaries for handling a digital transaction. For debit cards, the fees are on average between 0.40% and 0.80% of the transaction amount, according to industry officials.

"I find the logic a bit fallacious because the cost is not free ... I am a firm believer in low economics, but no economics student can believe in no economics," T.R. Ramachandran, Visa's India and South Asia head, said on Monday, speaking on a panel at an industry conference.

Ramachandran said if the government, the merchant and the consumer are all saving on the cost of cash via an electronic payments mechanism then the stakeholders should be adequately compensated.

India's Finance Ministry was not immediately reachable for comment on the matter outside of business hours.

Sitharaman had said in her budget speech that the Reserve Bank of India and banks would absorb these costs from the savings that will accrue to them on account of handling less cash as people move to digital payments.

But industry officials say there is still no clarity on who will pick up the tab.

The no-fee debit card plan could hit the fee revenues of banks, which are already burdened with bad loans of about $150 billion.

As of May this year there were 824.9 million debit cards in circulation in India compared with 48.9 million credit cards, according to the Reserve Bank of India.

($1 = 71.4380 Indian rupees)

(Reporting by Nupur Anand.; Editing by Euan Rocha and Jane Merriman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.