RBI invites inputs for cap on credit card fees

[ChurningNoob]

RBI invites inputs for cap on credit card fees - Times of India

India Business News: MUMBAI: The Reserve Bank of India (RBI), in a discussion paper on charges in the payments system, has flagged capping credit card fees as one of the i.

timesofindia.indiatimes.com

 

[kejriwal]

If they reduce MDR, the rewards and benefits on all credit cards will go down. Devaluation will happen to a great extent.
I suggest that we should exhaust all our points before any such step.

 

[AsB]

I think RBI should remove differences in discounts, when payments are made via Credit/Debit Cards, than when they are made via Cash/UPI .
Then, RBI should provide concessions such as tax benefits for those shopowners who prefer non-cash transactions , and Credit/Debit Cards

 

[Abhishek012]

I think RBI should remove differences in discounts, when payments are made via Credit/Debit Cards, than when they are made via Cash/UPI .
Then, RBI should provide concessions such as tax benefits for those shopowners who prefer non-cash transactions , and Credit/Debit Cards

RBI should launch 2nd network for credit card payment within India.

USA is planning to doing the same thing to break Visa/mastercard monopoly.

Durbin, Marshall Introduce Bipartisan Credit Card Competition Act​

Bill Would Enhance Competition And Choice In The Credit Card Network Market, Which Is Currently Dominated By The Visa-Mastercard Duopoly​

Full article - https://www.durbin.senate.gov/newsr...roduce-bipartisan-credit-card-competition-act

 

[Credit Karma]

RBI should launch 2nd network for credit card payment within India.

USA is planning to doing the same thing to break Visa/mastercard monopoly.

Durbin, Marshall Introduce Bipartisan Credit Card Competition Act​

Bill Would Enhance Competition And Choice In The Credit Card Network Market, Which Is Currently Dominated By The Visa-Mastercard Duopoly​

Full article - https://www.durbin.senate.gov/newsr...roduce-bipartisan-credit-card-competition-act

I don't think it will get through!

USA is a consumerism centric economy driven by consumer spending.

Say if they decided to cap the rewards and ultimately the "return on happiness" to consumers which they get in form of rewards you get a "recession" and that's BAD!

 

[AsB]

I don't think it will get through!

USA is a consumerism centric economy driven by consumer spending.

Say if they decided to cap the rewards and ultimately the "return on happiness" to consumers which they get in form of rewards you get a "recession" and that's BAD!

Not really. NPCI introduced UPI, RuPay cards, and they blasted their way. Payment systems will be good in India. A new channel which can challenge VISA and Masterpay can be very helpful. Also, a new channel will also be decided based on the feedback taken from the banks. So, banks will adopt it as well, if it is introduced.

 

[Credit Karma]

Not really. NPCI introduced UPI, RuPay cards, and they blasted their way. Payment systems will be good in India. A new channel which can challenge VISA and Masterpay can be very helpful. Also, a new channel will also be decided based on the feedback taken from the banks. So, banks will adopt it as well, if it is introduced.

The Government pays the fees on behalf of Rupay/NPCI.

If I'm remembering correctly it was in the tune of ₹1500 crore + amount for last fiscal year itself.

Government is doing this for financial inclusion. Once they get that going, back we go to the fees paradise 😉

 

[Abhishek012]

The Government pays the fees on behalf of Rupay/NPCI.

If I'm remembering correctly it was in the tune of ₹1500 crore + amount for last fiscal year itself.

Government is doing this for financial inclusion. Once they get that going back we go to the fees paradise 😉

Zero MDR only for RuPay debit cards and govt pays the fees only for RuPay debit cards, all RuPay debit card transaction under Rs2000.

RuPay prepaid/credit cards already charged MDR fees.

RBI Payments Vision 2025, already mentioned about 2nd network for offline POS terminal payment - https://www.technofino.in/community...cess-card-transactions-at-pos-terminals.1385/

Infact, when i start searching about 2nd networks, i found few countries already have 2nd networks and this countries bypass visa/mastercard network for domestic transactions. Ofcourse visa and mastercard is not happy about this move.

Last time i heard, Indonesia is also planning to do the same thing but former US President Donald trump visited Indonesia to talk about this matter. Later I heard news that Indonesia has postponed this plan.

 

[Abhishek012]

I don't think it will get through!

USA is a consumerism centric economy driven by consumer spending.

Say if they decided to cap the rewards and ultimately the "return on happiness" to consumers which they get in form of rewards you get a "recession" and that's BAD!

USA now planning to launch Fednow.

FedNow instant payment system set for launch between May and June 2023 (updated) - https://seekingalpha.com/news/38775...tem-plans-to-launch-between-may-and-june-2023​

USA and Europe also have A2A payments, according to some reports, by 2026. A2A payments will surpass card payments in the United States and Europe and dominate the most preferred payment systems in Europe and the United States.

If you dnt know what's A2A payment, Its Account to Account Instant payment system, same like UPI.

Enter your email id on e-commerce website payment page and you will get payment email. Select your bank and enter your A2A PIN and payment done.

 

[AsB]

FedNow instant payment system set for launch between May and June 2023 (updated) -

The people in USA and Europe are crazy about Credit Cards, and not in a way to earn rewards. They don't see it as a way to earn instat discounts during sale or get cashbacks from time to time. Rather they use credit cards for almost everything, and pay it back later. That is their way to manage their finances, (most of them are in lifelong debt due to this).
So, unless their Govt. comes up with something that can be similar to Credit Card structure in the FedNow model, it will be difficult for them to adopt.

 

[Abhishek012]

The people in USA and Europe are crazy about Credit Cards, and not in a way to earn rewards. They don't see it as a way to earn instat discounts during sale or get cashbacks from time to time. Rather they use credit cards for almost everything, and pay it back later. That is their way to manage their finances, (most of them are in lifelong debt due to this).
So, unless their Govt. comes up with something that can be similar to Credit Card structure in the FedNow model, it will be difficult for them to adopt.

Very few US and European people use credit cards. Some small and mid segment merchants also charges 2% to 3% extra for Credit card payments.

I already shared about A2A payments, A2A is also Instant payment system, same like UPI.

A2A payments rapidly expanding in all European countries and USA. Visa and mastercard also invest money in A2A payments.

A2A payment already surpassed credit cards in few European countries.

EU Plans A2A Instant Payment Regulation in 2022 - https://www.pymnts.com/news/regulat...t-regulation-in-2022-us-eyes-fednow-for-2023/​

 

[Credit Karma]

USA now planning to launch Fednow.

FedNow instant payment system set for launch between May and June 2023 (updated) - https://seekingalpha.com/news/38775...tem-plans-to-launch-between-may-and-june-2023​

USA and Europe also have A2A payments, according to some reports, by 2026. A2A payments will surpass card payments in the United States and Europe and dominate the most preferred payment systems in Europe and the United States.

If you dnt know what's A2A payment, Its Account to Account Instant payment system, same like UPI.

Enter your email id on e-commerce website payment page and you will get payment email. Select your bank and enter your A2A PIN and payment done.

A2A payments is a great tool to boost financial inclusion and to facilitate payments without introducing traction in transactions.

But if you think about it "Americans are 40% likely to use a credit card when making a purchase. Only 35.5% of American cardholders use their cards on a monthly basis. Around 23.7% of American cardholders don't use their cards despite having an account open."
Source

It is also worth noting that about 80% of USA citizens have at least one CC and most of them do revolve their credit. This is much more than that of India. And as per Business insider average ticket size on CC in India is at ₹14500 way more than Debit cards.

For stimulating the spending and thereby economy Gov as well as RBI has to hit a sweet spot when it comes to MDR.

Too little MDR and CC companies loose money, too much MDR, then merchants will stop accepting CC.

It's a real conundrum!

 

[AllSeeker]

I think more than MDR, Indian banks are more concerned with less number of user base. Rewards will continue till client base is wide spread, ones they have that they will start shrinking reward systems.

Right now, very small group holds credit cards and this problem is amplified as most of them own more than 1-2.

US has overall less interest rates, so taking debt on is not something they think great deal before doing so, also they have certain amount of social security and know it can be paid off with not much trouble or even if they can't they still can live off whatever government is offering as a support atm. Usually these rates are half or even lesser than Indians can get a loan for.

Situation in India is very different, loans or any kind of debt can be very risky and people are naturally averse to credit cards.

In India charges for credit cards are not that high to begin with, it would be weird to cap them further, as that's usually not the problem for new customer, its a problem for people like us who hold dozens of them and would rather not have new if its not LTF, as they cost, even if small and keeping them slowly creeps up in uncomfortable zone.

 

[Sam Walton]

If they reduce MDR, the rewards and benefits on all credit cards will go down. THATS WHAT I THINK.