In good news for those dependent on online payments, the Union Finance Ministry on Sunday asked banks not to collect charges for transactions conducted through services such as RuPay and UPI (Unified Payments Interface).

Multiple departments have made presentations in this regard to the Ministry of Finance these past few days. The objective of these presentations was to identify measures that can boost the economy in the post-Covid phase. One of the issues that cropped up repeatedly was that of banks collecting charges on electronic transactions carried out through UPI.

The first few transactions through UPI were exempted while the remaining were charged by banks as per the earlier system.

This was in violation of an earlier circular issued by the CBDT (Central Bureau of Direct Taxes). Any charge including MDR (Merchant Discount Rate) shall not be applicable on or after January 1, 2020, on payments made through electronic modes as per Section 10-A of the PSS (Payment and Settlement System) Act.

While the circular clearly said that no charges including Merchant Discount Rate on payments made through electronic modes were to be collected post-January 1 of this year, it was found that some banks continued to charge such transactions.

The Ministry of Finance has now advised banks to refund any charges collected on transactions made through electronic modes after January 1, 2020.