UPI for NRIs
Why in news? National Payments Corporation of India (NPCI) paved the way for international (phone) numbers to be able to transact using UPI
- Union Cabinet approved an incentive scheme for the promotion of RuPay debit Cards and low-value BHIM-UPI transactions
What about international numbers?
- Non-resident accounts such as non-resident external accounts (NRE) and non-resident ordinary accounts (NRO), having international numbers, will now be allowed into the UPI payment system.
- The NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.
Difference between Non external accounts and Non-resident ordinary account ?
- NRE accounts are those used by non-residents to transfer earnings from foreign soil to India
- NRO accounts are used to manage income earned in India by non-residents. These incomes could be rent, interest, pension, among other things.
- At present, users from ten countries will be able to avail the facility— Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.
How are payments made?
- NRIs to use the payment method for making utility bill payments for their families (or themselves) in India
- They can make purchases from e-commerce or online platforms and also payments to physical merchants who accept UPI QR based payments when they travel to India.
What is MDR?
- The Merchant Discount Rate (MDR) is the charge recovered by the acquirer from the final recipient of the payment, that is, the merchant.
- It is collected by the acquirer to compensate the varied service providers and intermediaries in the payment system.
What is the discussion on MDR?
- Presently, there is no MDR charge levied for RuPay-based debit card and UPI transactions.
- Stakeholders are concerned over cost recovery for the services they provide.
- The Reserve Bank of India (RBI) and varied stakeholders expressed concerns about the potential adverse impact of the zero MDR regime on the growth of the digital payments’ ecosystem.
- The NPCI requested the incentivisation of BHIM-UPI and RuPay debit card transactions to create “cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.”