India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on.
A $1B subsidy to eliminate friction on the payment front is peanuts.
One of the reasons why the fee is being considered is under the pressure of other payment providers who are loosing to UPI in Indian market. Its been believed to be one of the negotiation points by the US-India trade deals
Same reason the US is going after Pix in Brazil. The world is decoupling from the US and the US is going to try to flex against it as it continues. Dollar dominance and the “exorbitant privilege” continue to erode (with the acceleration self inflicted). Also shrinks the TAM of these private US firms to only the US versus the world.
Your government already controls your currency and thereby your assets, why would you die on the this particular hill of how you can transact this government-created currency? For free as opposed to for a fee no less? You don't believe transaction data isn't shared (sold) by commercial parties do you?
> I don’t want international private companies controlling payments, better have my own elected government manage it.
The ideal of course is decentralized payment systems with no middlemen, but if there are going to be middlemen, a competitive marketplace of middlemen driven primary by predictable financial incentives is vastly less scary than monopolization by power-centralizing political institutions.
> The interesting thing is that Visa's payment rails are cheaper than Pix. Pix charges businesses 0.22% to 0.33% while the Visa network rate is only 0.10% to 0.15% per transaction.
This is not factually accurate. Pix also has fraud controls built into the platform, and does fine doing far more volume than credit card rails in Brazil. It is an objective success, having avoided US financial service firms from skimming hundreds of basis points of total economic activity out of the Brazilian economy.
Brazil's Pix ‘much cheaper' than card payments, paper by central bank economists shows - https://www.reuters.com/article/business/brazils-pix-much-ch... - March 23rd, 2022 ("Brazil’s Pix retail instant payment system is “much cheaper” than card payments for merchants, according to a paper published Wednesday by the umbrella body of the world’s central banks, highlighting its growth potential for businesses after its vertiginous rise among individuals. The paper, which was co-authored by economists at the Brazilian central bank for the Bank of International Settlements (BIS), says Pix costs an average of 0.22% of a transaction’s value for merchants, whereas debit cards cost slightly above 1% and credit cards reach 2.2% in Brazil.")
> In this paper, we employ an instrument and individual-level banking data in Brazil to
examine the effects of a novel payment technology, Pix, on the use of other payment
technologies and its impact on the banking sector. We find evidence that Pix increases
use of the four most common payment technologies in Brazil among individuals and
firms. Furthermore, our empirical evidence suggests that Pix contributes to an
increase in the number of bank accounts, their use and access to credit, benefiting
different types of banks. The findings indicate that the implementation of new
payment technologies yields advantages not only for firms and individuals but also
for the broader banking and payment industry.
If the US had any foresight it could stave this off by making its own global payments system be the one with the lowest fees, and thereby keep people using US currency and US institutions.
Whereas if you give other countries the obvious win that they can stop paying ~3% of their entire economy to a foreign payments network then you lose the fees anyway and that other stuff on top of it.
> If the US had any foresight it could stave this off by making its own global payments system be the one with the lowest fees,
What global payments system? We have the worst payment systems in the developed world.
The US money transfer situation is so bad that all the major banks got tired of The Fed's incompetence...and simply bypassed The Fed. That's how we ended up with Zelle, which actually does instantaneous (or at least within minutes) transfers.
In 2026 it is virtually impossible to quickly move money from one account to another because every single bit of it has to pass through the US Federal Reserve's ancient systems. We're the laughing stock of the rest of the world's banking systems. Thirty years ago europeans could walk into a store, do a fund transfer to pay for something, and walk out. We still can't do that.
Literally the only way to buy something expensive in a store in the US is via credit card.
You can't use a debit card because of transaction limits and lack of consumer protections.
You can't use any of the "app" payment methods.
You can't do wire transfers.
You can't do checks because the US check clearing system is so bad, a check can initially clear (after a day or five), and then weeks later, bounce.
You can't do cash because it's now legal for cops to consider having an unusual amount of cash to be enough for reasonable suspicion and they've done some gymnastics that allow them to seize the cash and keep it even if the person is not charged or charges are dismissed.
>In 2026 it is virtually impossible to quickly move money from one account to another because every single bit of it has to pass through the US Federal Reserve's ancient systems
Which is why FedNow went live in 2024. In 2025 it already completed processing of $864 billion in transactions in real time.
I won't be surprised. In Australia, no public transport system accepts the national payment system (EFTPOS) and instead it is either a public transport specific card or one of the 3 American rails. In NSW, there was promise of a second phase to support EFTPOS but that is hasn't happened yet.
Putting your card in, say, Apple Pay is equivalent. How do you think Apple Pay works? It’s tap-to-pay, equivalent to your credit card. That’s why you can use Apple Pay wherever you use tap-to-pay on your card. That’s why Apple Pay doesn’t work at Walmart and merchants need to do no work to support Apple Pay.
In the US you really have no options. It’s card, or card, or maybe even card. There’s Zelle, which is irreversible. PayPal and friends, which charge a fee, so no. And crypto, which is used for drugs.
In india, nobody cares about Apple Pay. We care about UPI. Every nook and corner, every person old or young, every chai wala, every kirana shop uses it.
Salesman can scream the amount, the customer can without meddling through the crowd, scan and zoom the QR and make the payment, and the loudspeaker announces the payment.
Imagine using cards there, people will riot :)
Shops in general are wary of cards. Especially busy shops simply won't tolerate cards as they require someone to enter the figure.
Yes those busy shops will shudder. Goto banglore, visit a busy street chai shop, ask him to accept cards, he will shudder.
In 2026 "backward" is a dysphemism for "reliable".
Not sure what's making you shudder about carrying a payment instrument that doesn't need its batteries charged, doesn't need to run firmware or an OS, doesn't need a network connection independent of the payment terminal, and isn't simultaneously a surveillance device, but whatever floats your boat, I guess.
Sure. Just as the people walking away from the cliff edge are literally going "backwards" in relation to the folks whose trajectory will take them off the cliff.
You can make whatever comparison you want in terms of short-term convenience, but none of it addresses the inherent risk and diminished reliability of the solutions you're arguing for.
Clearly you have not been to India. I advise you visit a busy street chai shop in Banglore and see UPI in action.
If you still have the audacity to claim that cards, an inherently inferior payment method, as forward, then I have nothing else at my disposal.
Physically a hassle, technically inferior, putting customer at the mercy of the merchant device, unusable at busy merchants, etc... and the list goes on.
From the Wikipedia article it sounds like these typically require PIN entry which is something that would make them less suitable to public transport applications. Normal credit cards and mobile wallets all have modes of operation that directly target the public transit use case and if EFTPOS does not then it may be excluded on that basis without imperialistic US interference.
> One of the reasons why the fee is being considered is under the pressure of other payment providers who are loosing to UPI in Indian market.
Correlation is not causation. Banks have demanded this (getting rid of Zero MDR) for many years, even prior to Trump assuming office. However, it may have momemtum now due to the impending trade deal. But that's speculation either way, and the burden of proof rests with whoever is making that assertion.
What the government conceded (or gained, which could be a boring topic relatively) would make an impactful story. Unfortunately, newpapers today mostly rely on correlation rather than doing the hard work of finding someone who'll spill the beans. There's very little of Tehelka-style "Operation West End" (or "All the President's Men" for a movie equivalent) going on these days.
What a fall from grace for the progenitor of Non-Aligned Movement to be bowing down to USA and hurting its own people. The Nation has been betrayed by the State.
I agree with the sentiment - however, even after independence, India has been ruled by the same Anglophone/phile elite with nearly the same set of laws/policies/ interests. Even the Indian constitution comes in large part from the 1935 GoI Act passed in the British Parliament.
(Anglo-)India is of the Anglophones, by the Anglophones and for the Anglophones for all practical purposes.
That's why laws etc. are mandated to be written in this foreign language that's incomprehensible to the majority, and why there's a strict near-apartheid like barrier preventing higher education (and with it, higher employment) to non-Anglophones.
The only reason I imagine we don't hear about this systematic discrimination that prevent downstream material development like industrialization (as opposed to the ethereal one like caste) is perhaps because Western institutions have vested geopolitical interest in having such a large vassal, intellectually if not politically.
I assume it does have advantages. The common law of the ex British colonies are all broadly compatible, so there's the possibility of having judges from other countries decide cases. Trade and maritime law is/ was basically British law. I would guess it also helps foreign investment if the law is in a language those investors understand.
Yes, these were probably better reasons in the past though.
Well, NAM would only be successful with two power centers. One of the power centers disappeared which precipitated this state. It has nothing to do with the state as such.
India has gotten more powerful since the Cold War. If Iran can stand up to USA, then surely India can too; but only if the State has not sold its soul and its Nation.
India's per capita income is still only 1/6th of the world average. Iran can stand up to USA with a lot of destruction, which is exactly what is happening with India.
Indian numbers look impressive just because of the size of the population and demographic dividend and 90's information technology. However, successive governments have squandered all of those benefits, and the bad infrastructure, bad governance and badly educated population is coming to bite them back.
Things do not look good for India at all. I was born and lived in India till around a decade ago, everytime I go to India, I just see more potential being wasted and things become worse (even though they appear good on paper). India's GDP in 2020 is for the first time back at the 1965 levels (in relation to the world GDP) and now climate change is going to wreak havoc and things will get worse again.
I hope to be proven wrong but I'm sorely disappointed everytime.
Melodramatic much? It's a trade deal (if the parent is to be believed). Both sides are getting something out of it. Presumably, India needs access to the US market more than the other way round.
What do you mean "finally"? And why are you so willing to accept the fault of Kings but not the fault of the current Government in circumstances that look increasingly similar each passing day?
Just because a Government was elected doesn't mean that it can't be corrupt, what kind of naive understanding of politics is this?
I assumed you were joking about this, but wow, the US indeed did demand this from both India and Brazil. Brazil rejected while India knelt and surrendered. US also demanded that India not enforce any market cap limit for UPI payment providers to prevent monopolies - and India surrendered there as well.
Unfortunately, current Modi govt is compromised due to Adani and the Epstein files. It can only hop and jump to whatever Trump orders.
Any such issues on health care side? Here in India, at least in my state (Kerala), American Private Equity giants such as BlackStone and KKR are acquiring major hospital chains. I am worried they will ruin our healthcare just like what happened in USA. Healthcare was one thing India had better than USA (at least in availability and cost, availability as in being able to see a doctor same day or getting an MRI in a few hours). Now, that will disappear.
> The research from the United States — which is a decade further down this road — is sobering. Studies of PE-acquired hospitals document consistent patterns: non-revenue-generating services reduced, staff-to-patient ratios cut, ancillary charges inflated, and a systematic shift toward high-margin procedures.
I haven't observed it happening in the context of hospitals, but it absolutely is happening to medical education. Brazilian conglomerate Afya was born as a literal PE firm and by now has rolled up many if not most of the private medical schools. It's controlled by some german education conglomerate though.
Their SEC filing mentions they engage in "deregulation advocacy" which is no doubt a hilarious euphemism for lobbying the brazilian government so it relaxes quality standards for medical schools. No doubt they're responsible for much of the enshittification here.
There it is! Behind every revealed shittery and fuckery, there's one name that constantly come up. As for this example, I'll give you a clue: it's not India.
Completely agree - not everything has to be about profit. Treat the payment backbone as a public infrastructure. We pushed banks to open branches in rural area even if it was not "profitable" for them. Today, even Post Offices offer bank accounts in India. And while the BBC article keeps pushing the propaganda that business will absorb the cost, we know that the reality that businesses always pass on the burden and we consumers ultimately pay it.
And note that this is not being done to serve India's public interest, but under pressure from Trump - The hidden Trump factor in India’s proposed new UPI transaction levy - https://indianexpress.com/article/explained/explained-econom... . India's Prime Minister Modi is happy to do it though, because like his US counterpart, he too subscribes to anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich.
> Treat the payment backbone as a public infrastructure.
Yeah. Let banks fund this out of the 2% of NP they must use for CSR activities if they have to.
> he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich
I do not see this. In fact, he is TOO socialist. He was elected on the platform (one of them at least) of "minimum government, maximum governance" and has actually continued to expand the reach of government. The bureaucracy has not been tamed. The government continues to run businesses. Build a sovereign wealth/investment fund like Singapore if you want a share of the growth in the economy instead of running loss-making businesses for decades.
And all the centralization of decision-making. He is more of Nehru/Indira than he thinks he is.
> I do not see this. In fact, he is TOO socialist.
GST implementation, Demonetisation, unnecessary COVID restrictions etc. resulted in anarchy that was all designed to drain wealth (make labour cheaper) and / or transfer wealth from ordinary people or small businesses to the corporates (to make select rich, richer). He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries. The centralised decision-making stems from the fascist ideology that he subscribes to (RSS, the indian organisation that he emerged from, admired Mussolini and Hitler).
Needed. I run a business. The previous tax system was horrific in its complexity and corruption.
> Demonetisation
Implementation could have been better. But there is too much cash in the system for my comfort. Things must be digitized. We must ensure people pay their rightful share of taxes.
> unnecessary COVID restrictions etc
Hindsight. I remember how the media was blaming every single death on the government and making videos of funerals. We saw the best and worst of humanity during that period.
> He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries
Have you looked at the subsidy bills? Have you looked at the finances of the state governments? You know Modi was against the rewadi culture and then had to get into competitive cash giving? I absolutely hate it. But that is the cost of doing politics in India.
Cities provide free bus rides to women, and run buses in competition to metro routes, making metros nonviable. This is such short-sighted behavior. I do not know what to say.
> fascist ideology
I do not agree with the criticism. At all. This is fairly typical of the nominal left in India and outside. Will paint with a large brush. To understand the RSS, you must go back to Hindu-Muslim relations in British India, to stoning of Hindu processions in Nagpur of the 1920s (which continue across India to this day), to the Moplah massacres and forced conversions of Hindus, and even farther back.[1]
My biggest problem with the RSS is the hubris in the top echelon and deep anti-intellectualism. Bhagwat's "same DNA" theory is a laugh riot.
But this is a different topic more suitable for a different thread.
Dr. Manmohan Singh's conception of GST was indeed a good and necessary idea. But they way it was twisted and implemented to benefit crony capitalists and destroy India's informal economy was foolish as it was corrupt.
Who even writes these articles?! India used to have an excise, sales tax (replaced by VAT in the early 2000s) and octroi system. And LBT (Local Body Tax) where the municipal corporation staff that do not understand the B of balance sheet could harass you endlessly on your purchase and sales record. And a hundred other random industry-specific taxes. GST replaced all of that.
Businessmen were able to navigate all this mess and were suddenly unable to handle GST? Please!
Again, we are a large country and implementation is more often than not a shit show. The bureaucracy is extremely corrupt and the politicians in charge of ministries cannot tame them. They literally say to businessmen: "The minister will leave after the election next year. I will still be here."
> But GST inspectors (many of them have seen the good old days of sales tax and VAT, and obviously don’t want to let go of their power to extract bribes) harass such firms on flimsy grounds like ‘why don’t you have a company’s nameplate clearly displayed’ that can create nuisance in residential areas. [from the Print article]
This is very common low-level harassment. very little you can do about it except rewrite the laws to make such things non-actionable.
Article 311 of the constitution makes it next to impossible to fire public servants. This is why all the corrupt/non-performing officers get transferred, not sacked![1]
[1] 311. Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State (https://indiankanoon.org/doc/47623/)
> India used to have an excise, sales tax (replaced by VAT in the early 2000s) and octroi system.
And all of them were introduced with care to reduce the transition pain points of the MSMEs. None of it was as deliberately convoluted and poorly rolled out as the initial rollout of the GST by the Modi government. The tax officials themselves did not understand half of it, adding to the chaos and confusion of implementing it. Again, all this was deliberate and by design, in my opinion.
> Very specifically pointing out "free bus rides to women" which is very famous in India and associated with a state not run by the BJP (i.e central ruling party)
I am a pretty political/ideological person. I never try to hide that. But I support the government when I think they are right, and criticize them when they are wrong.
I guess you missed my point about cash handouts to women? That BJP governments are doing right now? My very first comment is a criticism of the government's current step! You want me to criticize the cash handouts and spare the free bus rides?
> I mean someone can say this with straight face in India today? Ffs :D
Say what with a straight face? Someone who managed to deal with the excise department but is unable to handle the GST department beggars belief. Which is what all those articles were about. Excise/sales tax/vat/GST are all the same people. Their nature is not going to change because the law changed.
> "engaging"
I am "engaging." It does not mean I have to sing the tune you expect. This is why I specifically said "But this is a different topic more suitable for a different thread," because talking about the politics of it eventually leads to flamewars and tone policing.
> article by India Today.
It is an opinion piece. About Islam on the Indian subcontinent. If the RSS is brought up, people need to know the context of their origin. About what happened on the subcontinent in that era.
As for invoking @dang, I hope dang at least has some sort of custom notification for his own username mentions. I wouldn't mind this entire thread/sub-thread getting nuked, along with mine and your comments (yes, both!). But as things go on hn, and dang has emphatically shown over the years, some OT discussions are more equal than other OT discussions. So yeah, there you go.
And you specifically pointing out things in your comment? There was a reason I chose not to reply to you. (And no, I am not implying you should not have chosen to reply to me, not at all!)
All the data about India's demonetisation points to it being a complete and utter waste of time. The goalposts kept shifting and the whole aim was never clear. People died, please do not minimise their deaths.
The absolute disaster of how COVID was managed was a shame, and is a borderline crime against humanity. Again, please do not minimise the deaths of millions of Indians as "the media was blaming every single death on the government". The government of Indian was directly responsible for that entire fiasco.
Did Trump's Tariffs create confusion and mayhem, increase price (drain wealth) and ultimately lead to the siphoning of billions of tax payer money (again, another drain) to rich corporates? Yes, it has. Make of that what you will ...
you have no concept of the political or economic spectrum, gotcha
If you need some help google "authoritarian capitalism", "state capitalism", "crony capitalism", or "corporatocracy". All of those are in opposition to anarcho-capitalism. Aka rather than limit government power they encourage the expansion of government influence in industry, thereby enriching the entrenched power players (megacorps) and subsequently greatly reward politicians and ex-gov employees for playing along.
Anthropic is working on becoming the modern poster boy of this.
Your confusion is understandable as Americans use a different political spectrum scale (i.e. Americans have their own political labelling system) - outside America, anyone would scoff, and even laugh, at the claim that the Democratic Party in the US is supposed to be the "left". (For the rest of the world, both the Democratic party and the Republican Party are centre-right parties, with current Trump administration leaning even more to the right- ...).
I don't think adding a 0.5% surcharge to transactions over Rupees 2000 is "pound foolish". Most transactions are smaller, and someone has to pay to maintain the infrastructure. :shrug:
Also: just because money is being wasted on cause $X does not mean that there's more of it lying around to be wasted on cause $Y! You've got to draw the line somewhere!
> someone has to pay to maintain the infrastructure. :shrug:
Under Indian law, companies must spend 2pc of their net profit on CSR activities (corporate social responsibility). Ask banks to use that money. The Indian banking sector made a combined profit of $40B this year. 2pc of that is $800M. Close to the $1B number.
> You've got to draw the line somewhere!
Draw it in the farm sector! They do not have to pay income tax on their income, get subsidies on fertilizers, free electricity, guaranteed prices for their crops. Small farmers cannot take advantage due to average holding size, and large farmers laugh all the way to the bank!
I think you overestimate how many millionaire farmers we have. Most of Indian farm sector is small holdings and they need the subsidies. Most of the power is with intermediaries and not farmers themselves. The intermediaries fund the farmers through high interest loans and additionally they provide distribution. The situation is much more complex and needs a thorough rework.
The problem is not with the poor/small farmers. Those people are genuinely fucked over. The problem are the larger "farmers", quotations because they do not do the farming themselves, rather renting the fields out to landless laborers at extraordinary costs, in a system reminiscent of the medieval feudal systems
Farmers will raise the prices. You might not care much about it but it'll hurt poor people much more than it'll hurt you. Government is basically paying farmers with your taxes to make lives of poor people easier.
> someone has to pay to maintain the infrastructure
Do you know what it costs to run the cash infrastructure? Maintaining physical branches, employees to handle cash, counting machines, counterfeit detectors, security personnel, armoured transport, theft risk etc. The costs of maintaining a centralised digital infrastructure pales in comparison to this. If anything you should get a discount for using digital.
There are other hidden benefits as well. Tax evasion and money laundering become a lot harder in a system that tracks transactions. That can be massive benefit or a dystopian nightmare depending on the people in charge, but for many governments that's something worth throwing money at.
But only since the digital age did the government actually _succeed_ in controlling currency on a massive scale, right up until the point cryptocurrency took off (and even that can be tracked, most cryptocurrencies are based on a public ledger after all).
> That can be massive benefit or a dystopian nightmare depending on the people in charge,
That just resolves to "dystopian nightmare", then. Any system whose proper functioning is dependent on always having the right people in charge is one that will inevitably function improperly.
India is a conservative society. Women are 50% of the vote bank. They actually vote in larger numbers compared to men in many constituencies. They manage households and are very quick to notice price increases etc. The free bus rides and cash handouts are basically a transparent attempt to buy their vote. It is what it is.
It fits perfectly literally everywhere on earth, the main challenge is in claiming that the masses can tolerate not being "intoxicated". For all we know religion is an inevitable characteristic of the human species.
Are the political parties really giving freebies because they want to serve the poor and improve their lives? Or is it a means to come to power so that they can loot us more? And are the political parties that resort to such tactics even capable of improving our economy in the first place, or ruin it further? I don't trust these tactics.
>India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on.
>A $1B subsidy to eliminate friction on the payment front is peanuts.
These are entirely independent issues.
Should India subsidize farmers like this? IDK, maybe
Should India charge fees on UPI payments? IDK, maybe
India (central govt.) also doesn't tax farmers even when they've made bumper profits from their produce. The moment a political party even mentions of taxing rich farmers, their politics is over.
Basically country is going to shits purely due to votebank politics, and this is true across party lines no matter who is in power.
They certainly wield power to mobilise poor farmers, leading to anarchy.
Highly recommend reading about Farm Bills that govt. had to take back even when surveys by Supreme Court showed that over 85% farmers across the country were in favor of those bills and wanted them turned into laws.
Agree. Antiquated Indian farm subsidies are the biggest impediment to sustained growth. Nothing can be done, because it'd be electoral suicide to touch them. India's holding more than 100 million tons (!) of grain due to the mandatory procurement policy. It is not merely wastage, but also an environmental disaster to keep doing this.
$1B or even $5B is nothing, given the impact UPI has had across the country.
Most of these reserve grains are already being diverted for Ethanol production once they "expire". It is sold to these Ethanol producers at very low rates (subsidised). The Ethanol producers sell these grains in the black market and make a tidy profit. They also buy back rotting grains dirt-cheap from these same suppliers and other markets. And then make Ethanol from it. A good example of systemic corruption ...
Where do you see $1B subsidy? There is no subsidy. The system is already profitable. This will generate a new revenue stream of $1B for banks out of thin air that has no reason to exist.
Indian farmer subsidization is retarded. india needs to make farming as unattractive a profession as possible. Every social ill in the subcontinent is ultimately due to the fact that the majority of the population is in farming.
The majority of Indians are involved in farming. In developed countries it's like three percent of the work force directly involved in farming. The job of farming is completely different in India versus developed nations. In developed countries farmers are essentially technical factory operators who use immense mechanization to grow crops. In India, a guy is steering an ox pulling a cart. You cannot build a developed nation without mechanized farming.
0.3-0.5% is still nowhere near the rates of visa and mastercard. Does UPI offer the same level of fraud protections or is it a free for all like Zelle is here in the states? Especially if they limit to > 2000 rupees.
Hopefully they allow foreigners some track to access UPI in the future.
Most US debit cards are 0.1%. Credit cards have to give the user a 0% loan for 60 days, someone has to pay for it including debt write offs. Can't compare a debt product with a cash product.
Isn't 0.5% very competitive and basically nothing compared to taxes on the transaction?
Here in Poland we have a budding "save cash" movement. And they make some good points about freedom and privacy but are the loudest about the processing fees when mostly it's a way for smaller merchants to avoid paying taxes. Which is fine, I think they should be exempted anyway, but let's not pretend that it's the 0.5% in fees rather than the 30% in taxes.
In Poland fees are capped at 0.3% for credit card, 0.2% for debit per EU. Which is why generally in the EU you don't have the insanity with credit card loyalty programs.
You optimize within realm of already paying higher fees, some optimization that is.
Also, some of us have actual lives to live and not obsess over such details, life is way too short and has much more to offer than bean counting accounting.
It’s not hard to optimize so that you get more than the fees’ worth of benefits. The bank is literally hoping that most of its clientele does not optimize so that it has more fees than benefits doled out.
And yes so far I’ve only seen childless people do this optimization. It seems likely that when life gets busier, a person wouldn’t find time to do this optimization.
The difference is that 0.5% on the whole payment, might in some cases be actually much more than taxes on the profit.
Or even worse, if you sell for whatever reason without profit, the tansaction fee is your loss.
People want every government service to run at a deficit and maximize the amount of pain inflicted to billionaires. They don't even need them to balance - they're just both good.
I really hope cash transactions become a little more normalised in India.
The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%). But let's say you accept that as a part of travelling - the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country.
Alternative, since no one accepts cash anymore, is that I have to carry thick wads of cash so I can hand out exact change. That still gets you the stink eye because most vendors don't like to deal with cash anymore.
> the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country
Same issue in a lot of Southeast Asia. After jumping through all hoops to get the correct app, id verified and paying a hefty fee, it was still a gamble if the restaurants would have a business QR code or a personal one.
One time in Laos I was on an island that didn't have an ATM, almost no cards were accepted and I had run out of local currency. So I ended up asking for the QR code before ordering at the restaurant to make sure it would work out.
In India it's super annoying when taking autos because the drivers won't have change and in 99% of the cases they have a personal code. So I just ended up using Uber with credit card, much less hassle.
I don't know, central banks seem super afraid of money laundering somehow. But just allow me to spend $100 or what, I just want to buy a quick coffee or a fruit from a street vendor, not a Rolex.
Some P2P is between family/friends. Or you are paying rent etc. But a lot of it is business transactions that move funds from one savings account to another because the auto driver is accepting a payment in his mother's or wife's account or something similar. There is so much friction in the banking system if you have to create a current account that this is pretty common.
The system needs to improve drastically to support the two sides instead of letting it be. Should help your use case as well if that happens
> it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps
An NRI account with PhonePe is good enough as someone with OCI, but even in my ancestral town and village Visa and AmEx adoption by payment processors has been high despite no real diaspora or tourism.
And there's no real point in optimizing for the kind of tourist who's going to go visit a slum like Paharganj or go to Kasol to partake in drugs.
That said, I guess it also depends on where an NRI or PIO is from as some states have better payment processor penetration than others.
But tbf, when my SO and I go to VN to visit family, it's the same story there (Momo/Zalo and cash rule Vietnam outside the tourist bubble).
Not being able to pay for things is a pretty fundamental problem even for a business traveler to Bangalore.
Last time I bit the bullet and set up Mony, which at least got me access to UPI, but it's limited mostly by government policy: you can't complete the KYC process until you've physically landed in India, can't transfer to personal accounts, fees on adding money, fees on keeping money (they charge "unused balance" fees!), etc.
> Not being able to pay for things is a pretty fundamental problem even for a business traveler to Bangalore
In what situation were you as a foreign traveler where you needed to pay UPI?
Convenience stores and hypermarts like Reliance SMART and DMart accept Visa and AmEx credit cards. Transit via Uber, Ola, and co accept Visa and AmEx credit cards. And most restaurants and bars targeted at outsiders accept Visa and AmEx credit cards. And Hotels accept Visa and AmEx credit cards or can be booked via platforms that accept them like AirBnB.
So transit, residence, restaurants, and convenience stores (all of which will be reimbursed by your employer) are all doable via credit card.
Fundamentally, UPI was built for India3, as were other peers across Asia, not foreigners.
> In what situation were you as a foreign traveler where you needed to pay UPI?
If you live in a tiny bubble and only take an Uber to the Work Campus, Uber to the small number of marts you've found that accept card, Uber to the small number of restaurants that accept card... you have to find them first of course.
Want to buy some cigarettes while you take a stroll in the evening? Good luck. Want a tuktuk to take you a mile across the beautifully walkable road infrastructure? Good luck. Want to get lunch with friends? Good luck.
90% of life doesn't exist inside the corpo "work hotel sleep" bubble, I described it to somebody as akin to trying to pay with bank transfer in the UK, technically you can do it... the manager will come out and spend 20 mins futzing, taxi drivers may be able to do it if you ask nicely, your shopping options will be very limited and far between because you're trying to transact in the non-predominant medium.
Yes, loads of places accept card, larger stores accept card, want coffee? Blue Tokai accepts card. Want Blinkit or Zomato? You need an Indian number first. Want a Hotel? Booking.com is predominantly "pay at the hotel" across most of India, which means it's a dice roll as to whether they'll accept card. You'd be surprised at how many hotels completely forget that not all customers are Indian+Aadhaar+UPI, except by the time you've got there and realized they accept neither C-form nor Card despite telling you explicitly they do - you've already spent the time, money and effort getting there only to find out that no... it's not practical in reality for you to book a hotel and pay for whatever reason. Repeat ad-nauseum everywhere daily
> Want to buy some cigarettes while you take a stroll in the evening
Why would you go buy a beedi from the local paan-wala?
> Want a tuktuk to take you a mile across the beautifully walkable road infrastructure
Why would you call an auto or e-rickshaw when you could call and pay for via Uber (which also does autorickshaw pairing)
> 90% of life doesn't exist inside the corpo "work hotel sleep" bubble
OP was talking about "business travel".
> You'd be surprised at how many hotels completely forget that not all customers are Indian+Aadhaar+UPI
They aren't forgetting. They just don't care about a foreign traveler. It's the same when I travelled to China outside of the foreigner bubble on multiple occasions
----
At the end of the day, foreigner who can afford India1 but is consuming like India3 is a waste. Doesn't matter if it's a backpacker or a kanjusi NRI.
Why would you go for a masala dosa with filter kaapi with your colleagues when you could order a hamburger from room service? Why would you hail an auto when you could just charter a helicopter instead?
> Why would you call an auto or e-rickshaw when you could call and pay for via Uber (which also does autorickshaw pairing)
I don't know when the last time was when you were in India, but using Uber to hail auto rickshaws requires direct payment to the driver at the end of the ride. Uber does not handle payments. Your credit cards are of no use for this. The driver will either take cash (without having change) or probably UPI.
> In what situation were you as a foreign traveler where you needed to pay UPI?
All the time? Credit cards are only accepted by fancy places and cash is increasingly a hassle, especially in a tech-forward place like BLR.
The final straw was when I bought some biryani at a shopping mall food court and tried to pay cash. They had no change, the neighboring stalls had no change, in the end they tried to wave it off and discount my meal by 40 rupees or something, and I tipped them 60 instead.
I mean this sounds like an edgecase, which is good tradeoff for the ~billion of people who this system is designed for.
Essentially UPI was there to stop the industrial fraud and money laundering that was going on india. I have not actually checked the efficacy of this though. The last time I checked was when modi made the largest bank note not legal tender.
That part aside it does sounds like VAT (a 20% sales tax on all purchases) but for transactions.
Is this a common experience now? I haven’t been there in a while, but one used to be able to use credit cards at bigger establishments and smaller vendors used to accept cash even if UPI was advertised in their shop. Rarely was anyone mad that you didn’t use UPI.
No vendor will say no to cash but having the right small change becomes a PITA in my experience but that was 3 years ago. But even the coconut guy on the corner had a QR code.
So a country of a billion+ people should reverse its very successful digitization efforts because a handful of tourists can’t be bothered to pay a small surcharge?
This issue isn't the surcharge but there are still limitations to it. The commercial banks really need to do something like this themselves.
Well they do, but last time I looked you needed to physically go to a branch, but not all branches do it - yeah I'm not going to spend half a day on my trip just to pay slightly easier. It needs to be something you can sign up in the airport in 10 minutes for.
Every time I've been to India I just ended up finding an ATM (that works with my card) and carrying around massive wads of cash. I even stayed at a hotel once that couldn't take international cards.
>The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along.
Indian built UPI for a single audience AKA their citizens
Governments having absolute control on who can pay who and being able to easily restrict certain groups from participating in the economy is not ideal, though (of course currently tourists being the only group this applies to is not a big deal..)
If you're worried about the markup for loading your digital wallet, what is the markup for any tourist trying to get cash from eg. Thomas Cook? I doubt any tourist could get currency at a significantly cheaper rate.
Unfortunately, this cannot be fixed. India has a huge boner for papers, KYC, etc. The state isn't going to let you access payments and communication services without a colonoscopy.
> the system is now available in some form for payments in 11 countries outside India.
I see this often cited, but in reality it's a farce. "UPI is international" the staunch defender says, so I rebut "Yes, in one place at the Eiffel Tower... everywhere else? The French have no idea what UPI is, and your bank will charge you stupid FX fees for card payments".
Meanwhile if I'm in India, people look at me weirdly for paying with UPI yet most won't take card payments outside of tourist areas or it will get declined because foreign cards are blocked - and if you try to pay cash suddenly nobody has any change, will refuse to take the 20 rupee note they gave you yesterday, or have concerns about whether the notes you literally just withdrew from an ATM are legitimate - meaning you can end up with notes that are defacto unspendable despite being perfectly legal tender and in acceptable condition.
And as a tourist... you want UPI? There are a few ways but they're byzantine, apps locked to the Indian App Store (for tourists?), in-person KYC upon landing, very low first-payment limit, topup/signup and idle fees that push the net fee % easily into the 5-10% range.
Lets look at a perfect example... you pre-KYC on an app ahead of your trip on the one app that allows remote KYC, but you can't load money onto - first you must provide your visa, but the eVisa doesn't count they want the actual visa stamped in your passport. You land, immediately after customs you submit the picture of your visa stamp and wait an indeterminate amount of time, it could be 8 hours, or 24 or 48 or it could get rejected and you could be required to do in-person KYC (either you go to them, or they come to you within a ~5hr window... but only in the major cities).
So day 1 it's impossible to use UPI. It gets approved on day 2, you take a taxi somewhere maybe a nice restaurant, your UPI is now loaded with INR and you try to pay the driver... Your driver has a personal UPI account, you can't pay him! You only have cash... Large denomination INR notes because that's what the ATM provides, he doesn't take card and refused to admit he has change. You eat the already inflated cost and swear to only use app-based services (assuming the Taxi Mafia hasn't had them banned in your city).
You get to the resto and enjoy a meal with your friends, it's a nice place and somewhat expensive, you come to pay, the bill is reasonable and you think "I will pay with UPI", you try paying, it's a business account so should be OK! NO.... You have exceeded your first-day limit! Waiter tells you there is no card machine, and they have no change for cash...
Eventually you leave India, there's a non-trivial amount left in your tourist UPI account, you look for somewhere to withdraw it back to your card - no physical counters open at the airport, you request a withdrawal via the app... it never comes, the next month you get hit with a 500 INR inactivity fee, your visa expires and the app shuts down, next month 500 INR inactivity fee - can't make support requests through the app any more because your visa is no longer valid... Your balance slowly goes to 0 because you didn't think to spend every last rupee on your way out so it gets eaten by the system.
I say a small sub-1% fee on UPI is fine, it's great infrastructure when it works, but more needs to be done with global UPI integration. I have QR enabled payments available across maybe 10 different countries and India sticks out as being the one that's consistently an absolute pain and actively works against you.
Well in GP's posting the system is universally used by Indians, but ends up costing foreigners quite a bit. That's seemingly not a problem that Indians would want to solve.
Incredibly, WeChat Pay in China is now easy for foreigners: submit a copy of passport, link a debit account, and you can use WeChat Pay with no problems. No physical presence in China required, and the only restriction is that you can't use it abroad (i.e., at WeChat Pay stores outside of China). I've had a fully working WeChat Pay account for a couple years now, and I've never once had to do anything in-person or anything except upload my passport and Tencent made it happen.
In this case, the callout about increasing Merchant Fees is the right thing to do. This isn't great for payments at all. Reduce the friction, improve ease of business.
UPI payment has enabled tracking actual sales data and helped with tax collection. This is an intangible benefit which is likely to go away with the introduction of the fee.
Yesterday an article on tipping hit HN and this reminds me of it. When you remove barriers people spend freely. Start throwing stupid pause moments, the value doesn't match the advertised price because of x fee, y tax, z undisclosed service or an outright wall screen begging for a tip, and people slow down their purchasing. It will be interesting to see an impact here if this goes through and it could be instructive to the value prop that tips bring to industry. You may think you are externalizing a cost but maybe you are really harming sales.
Ever since someone brought up this system a while ago and confused it with a Real-Time Gross Settlement (RTGS) system https://news.ycombinator.com/item?id=48875605 , it has been bothering me that seemingly no one is talking about the real long-term cost of this "free system."
The history of payment systems is a history of risk. A quick primer,
All large-scale payment systems that interface with banks must have an answer for the inherent conflict between what the bank does (i.e. provide debt) and how it does it (by taking savings).
If the purpose of banks is to take capital from customers and use it to provide debt to others, then how much money should they keep for their customers' withdrawals and transfers?
If you do constant transfers back-and-forth 24x7 multiple times a second, then banks need a lot of capital at hand to manage the liability.
So even though gross settlement is supposed to be real-time, most RTGSes allow banks to borrow from their government's central bank via an "intra-day credit" system and then effectively net / settle at the end of the day, https://www.newyorkfed.org/research/epr/08v14n2/exesummary/e...
This loophole in a supposedly real-time system reduces the amount of money that banks "actually" owe each other. This allows banks to keep smaller reserves and provide greater amounts of capital to their customers.
But if you net only a few times a day, it creates risk. What if a bank becomes insolvent in between? Then it wouldn't be able to meet the obligations created by its customers, which would mean that other banks would fall short on their obligations and so on.
It's a network contagion effect; which is partly why the US Fed spent the better part of a decade studying counter-party risk in settlement systems before designing the latest version of its RTGS.
The Fed has protocols in place to stop such contagions before they start. Does the Indian government and its central bank? Where's the capital required going to come from? If a bank fails, who pays for its obligations? The Fed (currently) has a free infinite money glitch backed by the US Military, but the Indian government doesn't. So... where's that money going to come from?
Who is underwriting this system? Have they modelled systemic collapse? Because given what I've read about Indian banks and their bad debts, https://www.bbc.com/news/world-asia-india-58654740 it's a when not an if.
...That may be about to change...
...The government has yet to decide the rate or exactly where it will apply...
...One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies....
So discussions are at an early stage and an excited journalist has made a international article out of a national one. It's up to Indians to make clear what they are willing to tolerate in this consultation phase.
The government has yet to decide the rate or exactly where it will apply, but proposals under discussion include a merchant discount rate (MDR) of 0.3-0.5% - a small fee paid by a business to the banks and payment companies that process its UPI payments - on larger transactions at big businesses.
The government says consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free.
One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies.
That could generate a sizeable new revenue stream - up to a billion dollars, by one estimate - for banks and payment companies while leaving the everyday smaller payment to the neighbourhood grocer effectively unchanged.
As a happy user of UPI, I think is incredible. I want it to be more resilient, from our national economic standpoint. A (small as possible) fee, judiciously applied, will hopefully create generally constructive back-pressure on the digital side of the cash economy.
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Why the oxymoron; "digital side of the cash economy"?
Zero-cost-to-consumer one-rupee instant transaction system is basically cash economy. Because, at least here in India, our so-called "informal sectors" have switched wholesale to it in Metro to Tier 2 cities. Significantly in Tier 3 cities and smaller towns. And non-uniformly across rural / village panchayat areas.
UPI, and indeed, digital transaction uptake essentially hews close to the availability of reasonably reliable grid electricity and mobile Internet connectivity and access to banking services. The abundance of low-cost UPI-capable devices is useful only if these precursors are useful.
Reasonable fee as an economy-scale tuned mass-damper.
I hope the result of applying merchant-fee-as-back-pressure, at any size of transactions, translates into a sizeable up-tick in hard cash transactions. Nations of people that want to remain sovereign and democratically-run, ought to incentivise heterogeneity of money flow mechanisms. Especially, they/we, the people, must ensure, through our democratic influence as citizens, that a sizeable portion of the/our economy is person-to-person hard cash transactions.
And this provides a measure for "is the fee punitive?". Let's say, hypothetically, India's money supply mechanism is resilient if about 75% of money supply is digital, and 25% is hard currency. Anything outside this envelope is tending towards punitive costs on the people, both as tax payers and as transaction-fee-payers. Our central bank could manage the money mix, through judiciously tuned per-transaction fee on UPI and other digital payments, not unlike managing the volume of banknotes in circulation. The digital printing press is infinite money, if the effective fee is zero (psychologically). Sometimes, you want to make the fee zero, to bring it all into balance again, but most times, you want to create some friction to keep it from becoming a nation-state level attack vector (whether self-goaled or externally inflicted).
Crypto currencies and/or CBDCs are emphatically NOT the answer for such resilience.
I'd go so far as to argue that those forms of currency undermine (pun intended) sovereign economic resilience, where "sovereign" includes the little guy as much as it does a multinational or a country.Crypto system infrastructure is brittle by design and construction. Its effective use is predicated on the magical availability of wildly complex planet-scale electrical and communication infrastructure, not to mention dedicated tending-to of fast-decaying compute hardware, by literally every single participant in the network. A USB stick of gold-brick valued crypto, buried in the backyard is not at all equivalent to a brick of solid gold buried in the backyard.
Digital money systems make top-echelon black-box corruption easy. Hard cash makes it hard.
Recent years have made it patently obvious that digital-first money flows are wide open to centrally-controlled and/or monopolistic manipulation by individuals in power.
Consider the logistics of managing USD 1M in small bills. Hell, even USD 100 bills because 1M of those is about 10 Kilograms of paper mass (or about 22 pounds for you non-SI enjoyers (why?)). Now you need a large handbag, or a cool trench coat with several large pockets.
Multiply 1M in USD 100 bills, by 1,000, for billion-dollar corruption. That is 10,000 Kg of paper bills alone. Now, add to that, the industrial pallets, containers, and packing material to hold it all sensibly. Let's say 1,000 Kg for each such cash pile.
Forcing people to scan a QR code to get a price and pay is a great way to charge people different prices based on whatever data you have on them. Everybody is just taking photos never knowing what the last person to take a photo was asked to pay for the same product.
if everything the govt provides has to be levied a fee, what is the tax collected for? oh probably buying weapons from usa, israel, uk, france and russia?
that is how you can maximize the "income": max inflation (printing) until people complain... max taxes until people complain... max fees, until people complain...
IOW, introduce multiple names for the same thing to hide it behind confusing complexity.
> Servers have to run, transactions settled, fraud detected and the system protected against cyberattacks. For years, the government has helped compensate banks and payment firms for providing a service that has effectively been treated as public infrastructure.
Sounds like it should just be public infrastructure and the government pays to maintain it.
Governments have paid to maintain a finance system since the introduction of token money (by minting the currency as a public good; also funding policing to prevent counterfeit) so this is effectively the same.
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[ 0.22 ms ] story [ 49.9 ms ] threadIndia is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on.
A $1B subsidy to eliminate friction on the payment front is peanuts.
https://en.wikipedia.org/wiki/Exorbitant_privilege
https://news.ycombinator.com/item?id=48994782
https://news.ycombinator.com/item?id=48415854
I don’t want international private companies controlling payments, better have my own elected government manage it.
The ideal of course is decentralized payment systems with no middlemen, but if there are going to be middlemen, a competitive marketplace of middlemen driven primary by predictable financial incentives is vastly less scary than monopolization by power-centralizing political institutions.
Pix charges businesses 0.22% to 0.33% while the Visa network rate is only 0.10% to 0.15% per transaction.
This is not factually accurate. Pix also has fraud controls built into the platform, and does fine doing far more volume than credit card rails in Brazil. It is an objective success, having avoided US financial service firms from skimming hundreds of basis points of total economic activity out of the Brazilian economy.
Brazil's Pix payment system faces pressure from Visa and Mastercard - https://news.ycombinator.com/item?id=48052371 - May 2026 (383 comments)
Brazil's Pix ‘much cheaper' than card payments, paper by central bank economists shows - https://www.reuters.com/article/business/brazils-pix-much-ch... - March 23rd, 2022 ("Brazil’s Pix retail instant payment system is “much cheaper” than card payments for merchants, according to a paper published Wednesday by the umbrella body of the world’s central banks, highlighting its growth potential for businesses after its vertiginous rise among individuals. The paper, which was co-authored by economists at the Brazilian central bank for the Bank of International Settlements (BIS), says Pix costs an average of 0.22% of a transaction’s value for merchants, whereas debit cards cost slightly above 1% and credit cards reach 2.2% in Brazil.")
Payment technology complementarities and their consequences on the banking sector: evidence from Brazil’s Pix - https://www.bis.org/publ/bppdf/bispap152_c.pdf - December 2024
> In this paper, we employ an instrument and individual-level banking data in Brazil to examine the effects of a novel payment technology, Pix, on the use of other payment technologies and its impact on the banking sector. We find evidence that Pix increases use of the four most common payment technologies in Brazil among individuals and firms. Furthermore, our empirical evidence suggests that Pix contributes to an increase in the number of bank accounts, their use and access to credit, benefiting different types of banks. The findings indicate that the implementation of new payment technologies yields advantages not only for firms and individuals but also for the broader banking and payment industry.
Whereas if you give other countries the obvious win that they can stop paying ~3% of their entire economy to a foreign payments network then you lose the fees anyway and that other stuff on top of it.
What global payments system? We have the worst payment systems in the developed world.
The US money transfer situation is so bad that all the major banks got tired of The Fed's incompetence...and simply bypassed The Fed. That's how we ended up with Zelle, which actually does instantaneous (or at least within minutes) transfers.
In 2026 it is virtually impossible to quickly move money from one account to another because every single bit of it has to pass through the US Federal Reserve's ancient systems. We're the laughing stock of the rest of the world's banking systems. Thirty years ago europeans could walk into a store, do a fund transfer to pay for something, and walk out. We still can't do that.
Literally the only way to buy something expensive in a store in the US is via credit card.
You can't use a debit card because of transaction limits and lack of consumer protections.
You can't use any of the "app" payment methods.
You can't do wire transfers.
You can't do checks because the US check clearing system is so bad, a check can initially clear (after a day or five), and then weeks later, bounce.
You can't do cash because it's now legal for cops to consider having an unusual amount of cash to be enough for reasonable suspicion and they've done some gymnastics that allow them to seize the cash and keep it even if the person is not charged or charges are dismissed.
My debit card is branded Visa so it has the Visa Zero Liability protections, and I can raise the purchase limit from $6k to $25k using the app.
Which is why FedNow went live in 2024. In 2025 it already completed processing of $864 billion in transactions in real time.
https://www.frbservices.org/resources/financial-services/fed...
2026 is already looking to exceed $1 trillion in transactions.
To be fair:
- 3% is on the higher end of the fees amounts. In the EU they are now capped at 0.3% for example
- part of the interchange fee goes to the issuing bank, which is usually local
The American Empire is alive and well.
In the US you really have no options. It’s card, or card, or maybe even card. There’s Zelle, which is irreversible. PayPal and friends, which charge a fee, so no. And crypto, which is used for drugs.
Salesman can scream the amount, the customer can without meddling through the crowd, scan and zoom the QR and make the payment, and the loudspeaker announces the payment.
Imagine using cards there, people will riot :)
Shops in general are wary of cards. Especially busy shops simply won't tolerate cards as they require someone to enter the figure.
Yes those busy shops will shudder. Goto banglore, visit a busy street chai shop, ask him to accept cards, he will shudder.
Not sure what's making you shudder about carrying a payment instrument that doesn't need its batteries charged, doesn't need to run firmware or an OS, doesn't need a network connection independent of the payment terminal, and isn't simultaneously a surveillance device, but whatever floats your boat, I guess.
Backwards means backwards. No euphemism. Period.
Sure. Just as the people walking away from the cliff edge are literally going "backwards" in relation to the folks whose trajectory will take them off the cliff.
You can make whatever comparison you want in terms of short-term convenience, but none of it addresses the inherent risk and diminished reliability of the solutions you're arguing for.
If you still have the audacity to claim that cards, an inherently inferior payment method, as forward, then I have nothing else at my disposal.
Physically a hassle, technically inferior, putting customer at the mercy of the merchant device, unusable at busy merchants, etc... and the list goes on.
Correlation is not causation. Banks have demanded this (getting rid of Zero MDR) for many years, even prior to Trump assuming office. However, it may have momemtum now due to the impending trade deal. But that's speculation either way, and the burden of proof rests with whoever is making that assertion.
What the government conceded (or gained, which could be a boring topic relatively) would make an impactful story. Unfortunately, newpapers today mostly rely on correlation rather than doing the hard work of finding someone who'll spill the beans. There's very little of Tehelka-style "Operation West End" (or "All the President's Men" for a movie equivalent) going on these days.
(Anglo-)India is of the Anglophones, by the Anglophones and for the Anglophones for all practical purposes.
That's why laws etc. are mandated to be written in this foreign language that's incomprehensible to the majority, and why there's a strict near-apartheid like barrier preventing higher education (and with it, higher employment) to non-Anglophones.
The only reason I imagine we don't hear about this systematic discrimination that prevent downstream material development like industrialization (as opposed to the ethereal one like caste) is perhaps because Western institutions have vested geopolitical interest in having such a large vassal, intellectually if not politically.
My wife is from south india, and I’m a frequent visitor to India.
It’s evident that Hindi nationalism is to the benefit of the north, while southern culture is slowly being replaced.
I assume it does have advantages. The common law of the ex British colonies are all broadly compatible, so there's the possibility of having judges from other countries decide cases. Trade and maritime law is/ was basically British law. I would guess it also helps foreign investment if the law is in a language those investors understand.
Yes, these were probably better reasons in the past though.
Indian numbers look impressive just because of the size of the population and demographic dividend and 90's information technology. However, successive governments have squandered all of those benefits, and the bad infrastructure, bad governance and badly educated population is coming to bite them back.
Things do not look good for India at all. I was born and lived in India till around a decade ago, everytime I go to India, I just see more potential being wasted and things become worse (even though they appear good on paper). India's GDP in 2020 is for the first time back at the 1965 levels (in relation to the world GDP) and now climate change is going to wreak havoc and things will get worse again.
I hope to be proven wrong but I'm sorely disappointed everytime.
Indian kings made deals with the East India Company. What did the people got out of it? Destitution?
So no, I am not being melodramatic. India has a history of the State betraying the Nation. Sadly, this is but the latest chapter in a very old saga.
Don't forever be in victim mode. India is a democracy.
People elect the members of parliament.
Finally you admit blame on your own kings/rulers.
Just because a Government was elected doesn't mean that it can't be corrupt, what kind of naive understanding of politics is this?
Unfortunately, current Modi govt is compromised due to Adani and the Epstein files. It can only hop and jump to whatever Trump orders.
https://indhospitalsolution.com/blogs/keralas-hospital-gold-...
> The research from the United States — which is a decade further down this road — is sobering. Studies of PE-acquired hospitals document consistent patterns: non-revenue-generating services reduced, staff-to-patient ratios cut, ancillary charges inflated, and a systematic shift toward high-margin procedures.
https://jeswinjos.medium.com/someone-is-quietly-buying-keral...
Their SEC filing mentions they engage in "deregulation advocacy" which is no doubt a hilarious euphemism for lobbying the brazilian government so it relaxes quality standards for medical schools. No doubt they're responsible for much of the enshittification here.
There it is! Behind every revealed shittery and fuckery, there's one name that constantly come up. As for this example, I'll give you a clue: it's not India.
And note that this is not being done to serve India's public interest, but under pressure from Trump - The hidden Trump factor in India’s proposed new UPI transaction levy - https://indianexpress.com/article/explained/explained-econom... . India's Prime Minister Modi is happy to do it though, because like his US counterpart, he too subscribes to anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich.
Yeah. Let banks fund this out of the 2% of NP they must use for CSR activities if they have to.
> he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich
I do not see this. In fact, he is TOO socialist. He was elected on the platform (one of them at least) of "minimum government, maximum governance" and has actually continued to expand the reach of government. The bureaucracy has not been tamed. The government continues to run businesses. Build a sovereign wealth/investment fund like Singapore if you want a share of the growth in the economy instead of running loss-making businesses for decades.
And all the centralization of decision-making. He is more of Nehru/Indira than he thinks he is.
GST implementation, Demonetisation, unnecessary COVID restrictions etc. resulted in anarchy that was all designed to drain wealth (make labour cheaper) and / or transfer wealth from ordinary people or small businesses to the corporates (to make select rich, richer). He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries. The centralised decision-making stems from the fascist ideology that he subscribes to (RSS, the indian organisation that he emerged from, admired Mussolini and Hitler).
Needed. I run a business. The previous tax system was horrific in its complexity and corruption.
> Demonetisation
Implementation could have been better. But there is too much cash in the system for my comfort. Things must be digitized. We must ensure people pay their rightful share of taxes.
> unnecessary COVID restrictions etc
Hindsight. I remember how the media was blaming every single death on the government and making videos of funerals. We saw the best and worst of humanity during that period.
> He has also weakened all social welfare programs of the previous government by reducing funds or introducing restrictions designed to sabotage it for the intended beneficiaries
Have you looked at the subsidy bills? Have you looked at the finances of the state governments? You know Modi was against the rewadi culture and then had to get into competitive cash giving? I absolutely hate it. But that is the cost of doing politics in India.
Cities provide free bus rides to women, and run buses in competition to metro routes, making metros nonviable. This is such short-sighted behavior. I do not know what to say.
> fascist ideology
I do not agree with the criticism. At all. This is fairly typical of the nominal left in India and outside. Will paint with a large brush. To understand the RSS, you must go back to Hindu-Muslim relations in British India, to stoning of Hindu processions in Nagpur of the 1920s (which continue across India to this day), to the Moplah massacres and forced conversions of Hindus, and even farther back.[1]
My biggest problem with the RSS is the hubris in the top echelon and deep anti-intellectualism. Bhagwat's "same DNA" theory is a laugh riot.
But this is a different topic more suitable for a different thread.
[1] Pakistan: A 300-year-old project that Jinnah completed with Partition (https://www.indiatoday.in/opinion/story/partition-india-paki...)
- Demonetisation, GST and lockdown: How the Modi government has wrecked India’s small businesses - https://scroll.in/article/1011509/demonetisation-gst-and-loc...
- India after Goods and Services Tax: Hundreds of thousands lose jobs, small businesses shut down - https://gulfnews.com/world/asia/india/india-after-goods-and-...
- How GST is killing small businesses with inspector raj and suffocating compliance - https://theprint.in/opinion/how-gst-is-killing-small-busines...
Dr. Manmohan Singh's conception of GST was indeed a good and necessary idea. But they way it was twisted and implemented to benefit crony capitalists and destroy India's informal economy was foolish as it was corrupt.
Businessmen were able to navigate all this mess and were suddenly unable to handle GST? Please!
Again, we are a large country and implementation is more often than not a shit show. The bureaucracy is extremely corrupt and the politicians in charge of ministries cannot tame them. They literally say to businessmen: "The minister will leave after the election next year. I will still be here."
> But GST inspectors (many of them have seen the good old days of sales tax and VAT, and obviously don’t want to let go of their power to extract bribes) harass such firms on flimsy grounds like ‘why don’t you have a company’s nameplate clearly displayed’ that can create nuisance in residential areas. [from the Print article]
This is very common low-level harassment. very little you can do about it except rewrite the laws to make such things non-actionable.
Article 311 of the constitution makes it next to impossible to fire public servants. This is why all the corrupt/non-performing officers get transferred, not sacked![1]
[1] 311. Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State (https://indiankanoon.org/doc/47623/)
And all of them were introduced with care to reduce the transition pain points of the MSMEs. None of it was as deliberately convoluted and poorly rolled out as the initial rollout of the GST by the Modi government. The tax officials themselves did not understand half of it, adding to the chaos and confusion of implementing it. Again, all this was deliberate and by design, in my opinion.
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> Very specifically pointing out "free bus rides to women" which is very famous in India and associated with a state not run by the BJP (i.e central ruling party)
I am a pretty political/ideological person. I never try to hide that. But I support the government when I think they are right, and criticize them when they are wrong.
I guess you missed my point about cash handouts to women? That BJP governments are doing right now? My very first comment is a criticism of the government's current step! You want me to criticize the cash handouts and spare the free bus rides?
> I mean someone can say this with straight face in India today? Ffs :D
Say what with a straight face? Someone who managed to deal with the excise department but is unable to handle the GST department beggars belief. Which is what all those articles were about. Excise/sales tax/vat/GST are all the same people. Their nature is not going to change because the law changed.
> "engaging"
I am "engaging." It does not mean I have to sing the tune you expect. This is why I specifically said "But this is a different topic more suitable for a different thread," because talking about the politics of it eventually leads to flamewars and tone policing.
> article by India Today.
It is an opinion piece. About Islam on the Indian subcontinent. If the RSS is brought up, people need to know the context of their origin. About what happened on the subcontinent in that era.
As for invoking @dang, I hope dang at least has some sort of custom notification for his own username mentions. I wouldn't mind this entire thread/sub-thread getting nuked, along with mine and your comments (yes, both!). But as things go on hn, and dang has emphatically shown over the years, some OT discussions are more equal than other OT discussions. So yeah, there you go.
And you specifically pointing out things in your comment? There was a reason I chose not to reply to you. (And no, I am not implying you should not have chosen to reply to me, not at all!)
The absolute disaster of how COVID was managed was a shame, and is a borderline crime against humanity. Again, please do not minimise the deaths of millions of Indians as "the media was blaming every single death on the government". The government of Indian was directly responsible for that entire fiasco.
Trump is not at all a libertarian? He's probably the least libertarian republican president in modern history.
you have no concept of the political or economic spectrum, gotcha
If you need some help google "authoritarian capitalism", "state capitalism", "crony capitalism", or "corporatocracy". All of those are in opposition to anarcho-capitalism. Aka rather than limit government power they encourage the expansion of government influence in industry, thereby enriching the entrenched power players (megacorps) and subsequently greatly reward politicians and ex-gov employees for playing along.
Anthropic is working on becoming the modern poster boy of this.
Also: just because money is being wasted on cause $X does not mean that there's more of it lying around to be wasted on cause $Y! You've got to draw the line somewhere!
Under Indian law, companies must spend 2pc of their net profit on CSR activities (corporate social responsibility). Ask banks to use that money. The Indian banking sector made a combined profit of $40B this year. 2pc of that is $800M. Close to the $1B number.
> You've got to draw the line somewhere!
Draw it in the farm sector! They do not have to pay income tax on their income, get subsidies on fertilizers, free electricity, guaranteed prices for their crops. Small farmers cannot take advantage due to average holding size, and large farmers laugh all the way to the bank!
Farmers will raise the prices. You might not care much about it but it'll hurt poor people much more than it'll hurt you. Government is basically paying farmers with your taxes to make lives of poor people easier.
Do you know what it costs to run the cash infrastructure? Maintaining physical branches, employees to handle cash, counting machines, counterfeit detectors, security personnel, armoured transport, theft risk etc. The costs of maintaining a centralised digital infrastructure pales in comparison to this. If anything you should get a discount for using digital.
That just resolves to "dystopian nightmare", then. Any system whose proper functioning is dependent on always having the right people in charge is one that will inevitably function improperly.
> Transactions above ₹2,000 account for only about 4% of total UPI transaction volume, but they make up roughly 67% of the total transaction value.
https://www.outlookbusiness.com/news/will-upi-payments-above...
There is also a misconception. It is not in all public transport. In TN state, it is on select buses - slower buses only.
If you are asking if the politicians are bad then it is yes.
- Free Bus Service Schemes for Women in India: A Gendered Approach to Public Transport and Economic Inclusion - https://www.impriindia.com/insights/policy-update/free-bus-s...
- Freebie or Freedom? Tamil Nadu’s Free Bus Travel Scheme for Women - https://www.impriindia.com/insights/policy-update/free-bus-s...
>A $1B subsidy to eliminate friction on the payment front is peanuts.
These are entirely independent issues.
Should India subsidize farmers like this? IDK, maybe
Should India charge fees on UPI payments? IDK, maybe
Basically country is going to shits purely due to votebank politics, and this is true across party lines no matter who is in power.
Highly recommend reading about Farm Bills that govt. had to take back even when surveys by Supreme Court showed that over 85% farmers across the country were in favor of those bills and wanted them turned into laws.
$1B or even $5B is nothing, given the impact UPI has had across the country.
After whatever maybe 15 years that have banned the practice.
Hopefully they allow foreigners some track to access UPI in the future.
https://havemony.com
Not cheap and only to business QR codes (so proper shops which probably will take credit card anyway), but it works.
Here in Poland we have a budding "save cash" movement. And they make some good points about freedom and privacy but are the loudest about the processing fees when mostly it's a way for smaller merchants to avoid paying taxes. Which is fine, I think they should be exempted anyway, but let's not pretend that it's the 0.5% in fees rather than the 30% in taxes.
Also, some of us have actual lives to live and not obsess over such details, life is way too short and has much more to offer than bean counting accounting.
And yes so far I’ve only seen childless people do this optimization. It seems likely that when life gets busier, a person wouldn’t find time to do this optimization.
The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%). But let's say you accept that as a part of travelling - the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country.
Alternative, since no one accepts cash anymore, is that I have to carry thick wads of cash so I can hand out exact change. That still gets you the stink eye because most vendors don't like to deal with cash anymore.
Same issue in a lot of Southeast Asia. After jumping through all hoops to get the correct app, id verified and paying a hefty fee, it was still a gamble if the restaurants would have a business QR code or a personal one.
One time in Laos I was on an island that didn't have an ATM, almost no cards were accepted and I had run out of local currency. So I ended up asking for the QR code before ordering at the restaurant to make sure it would work out.
In India it's super annoying when taking autos because the drivers won't have change and in 99% of the cases they have a personal code. So I just ended up using Uber with credit card, much less hassle.
I don't know, central banks seem super afraid of money laundering somehow. But just allow me to spend $100 or what, I just want to buy a quick coffee or a fruit from a street vendor, not a Rolex.
Some P2P is between family/friends. Or you are paying rent etc. But a lot of it is business transactions that move funds from one savings account to another because the auto driver is accepting a payment in his mother's or wife's account or something similar. There is so much friction in the banking system if you have to create a current account that this is pretty common.
The system needs to improve drastically to support the two sides instead of letting it be. Should help your use case as well if that happens
An NRI account with PhonePe is good enough as someone with OCI, but even in my ancestral town and village Visa and AmEx adoption by payment processors has been high despite no real diaspora or tourism.
And there's no real point in optimizing for the kind of tourist who's going to go visit a slum like Paharganj or go to Kasol to partake in drugs.
That said, I guess it also depends on where an NRI or PIO is from as some states have better payment processor penetration than others.
But tbf, when my SO and I go to VN to visit family, it's the same story there (Momo/Zalo and cash rule Vietnam outside the tourist bubble).
Last time I bit the bullet and set up Mony, which at least got me access to UPI, but it's limited mostly by government policy: you can't complete the KYC process until you've physically landed in India, can't transfer to personal accounts, fees on adding money, fees on keeping money (they charge "unused balance" fees!), etc.
In what situation were you as a foreign traveler where you needed to pay UPI?
Convenience stores and hypermarts like Reliance SMART and DMart accept Visa and AmEx credit cards. Transit via Uber, Ola, and co accept Visa and AmEx credit cards. And most restaurants and bars targeted at outsiders accept Visa and AmEx credit cards. And Hotels accept Visa and AmEx credit cards or can be booked via platforms that accept them like AirBnB.
So transit, residence, restaurants, and convenience stores (all of which will be reimbursed by your employer) are all doable via credit card.
Fundamentally, UPI was built for India3, as were other peers across Asia, not foreigners.
If you live in a tiny bubble and only take an Uber to the Work Campus, Uber to the small number of marts you've found that accept card, Uber to the small number of restaurants that accept card... you have to find them first of course.
Want to buy some cigarettes while you take a stroll in the evening? Good luck. Want a tuktuk to take you a mile across the beautifully walkable road infrastructure? Good luck. Want to get lunch with friends? Good luck.
90% of life doesn't exist inside the corpo "work hotel sleep" bubble, I described it to somebody as akin to trying to pay with bank transfer in the UK, technically you can do it... the manager will come out and spend 20 mins futzing, taxi drivers may be able to do it if you ask nicely, your shopping options will be very limited and far between because you're trying to transact in the non-predominant medium.
Yes, loads of places accept card, larger stores accept card, want coffee? Blue Tokai accepts card. Want Blinkit or Zomato? You need an Indian number first. Want a Hotel? Booking.com is predominantly "pay at the hotel" across most of India, which means it's a dice roll as to whether they'll accept card. You'd be surprised at how many hotels completely forget that not all customers are Indian+Aadhaar+UPI, except by the time you've got there and realized they accept neither C-form nor Card despite telling you explicitly they do - you've already spent the time, money and effort getting there only to find out that no... it's not practical in reality for you to book a hotel and pay for whatever reason. Repeat ad-nauseum everywhere daily
Why would you go buy a beedi from the local paan-wala?
> Want a tuktuk to take you a mile across the beautifully walkable road infrastructure
Why would you call an auto or e-rickshaw when you could call and pay for via Uber (which also does autorickshaw pairing)
> 90% of life doesn't exist inside the corpo "work hotel sleep" bubble
OP was talking about "business travel".
> You'd be surprised at how many hotels completely forget that not all customers are Indian+Aadhaar+UPI
They aren't forgetting. They just don't care about a foreign traveler. It's the same when I travelled to China outside of the foreigner bubble on multiple occasions
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At the end of the day, foreigner who can afford India1 but is consuming like India3 is a waste. Doesn't matter if it's a backpacker or a kanjusi NRI.
I don't know when the last time was when you were in India, but using Uber to hail auto rickshaws requires direct payment to the driver at the end of the ride. Uber does not handle payments. Your credit cards are of no use for this. The driver will either take cash (without having change) or probably UPI.
All the time? Credit cards are only accepted by fancy places and cash is increasingly a hassle, especially in a tech-forward place like BLR.
The final straw was when I bought some biryani at a shopping mall food court and tried to pay cash. They had no change, the neighboring stalls had no change, in the end they tried to wave it off and discount my meal by 40 rupees or something, and I tipped them 60 instead.
Essentially UPI was there to stop the industrial fraud and money laundering that was going on india. I have not actually checked the efficacy of this though. The last time I checked was when modi made the largest bank note not legal tender.
That part aside it does sounds like VAT (a 20% sales tax on all purchases) but for transactions.
But making sure that tourists don't pay a 3% charge, and/or can't do p2p? naaa. thats deliberate.
tourists are rich, generally, and can be a rich source of money laundering options.
Or a credit card.
.... the markup being what the credit card companies charge them.
Well they do, but last time I looked you needed to physically go to a branch, but not all branches do it - yeah I'm not going to spend half a day on my trip just to pay slightly easier. It needs to be something you can sign up in the airport in 10 minutes for.
Every time I've been to India I just ended up finding an ATM (that works with my card) and carrying around massive wads of cash. I even stayed at a hotel once that couldn't take international cards.
Indian built UPI for a single audience AKA their citizens
https://www.npci.org.in/blog/upi-one-world-your-digital-pass...
Unfortunately, this cannot be fixed. India has a huge boner for papers, KYC, etc. The state isn't going to let you access payments and communication services without a colonoscopy.
I see this often cited, but in reality it's a farce. "UPI is international" the staunch defender says, so I rebut "Yes, in one place at the Eiffel Tower... everywhere else? The French have no idea what UPI is, and your bank will charge you stupid FX fees for card payments".
Meanwhile if I'm in India, people look at me weirdly for paying with UPI yet most won't take card payments outside of tourist areas or it will get declined because foreign cards are blocked - and if you try to pay cash suddenly nobody has any change, will refuse to take the 20 rupee note they gave you yesterday, or have concerns about whether the notes you literally just withdrew from an ATM are legitimate - meaning you can end up with notes that are defacto unspendable despite being perfectly legal tender and in acceptable condition.
And as a tourist... you want UPI? There are a few ways but they're byzantine, apps locked to the Indian App Store (for tourists?), in-person KYC upon landing, very low first-payment limit, topup/signup and idle fees that push the net fee % easily into the 5-10% range.
Lets look at a perfect example... you pre-KYC on an app ahead of your trip on the one app that allows remote KYC, but you can't load money onto - first you must provide your visa, but the eVisa doesn't count they want the actual visa stamped in your passport. You land, immediately after customs you submit the picture of your visa stamp and wait an indeterminate amount of time, it could be 8 hours, or 24 or 48 or it could get rejected and you could be required to do in-person KYC (either you go to them, or they come to you within a ~5hr window... but only in the major cities).
So day 1 it's impossible to use UPI. It gets approved on day 2, you take a taxi somewhere maybe a nice restaurant, your UPI is now loaded with INR and you try to pay the driver... Your driver has a personal UPI account, you can't pay him! You only have cash... Large denomination INR notes because that's what the ATM provides, he doesn't take card and refused to admit he has change. You eat the already inflated cost and swear to only use app-based services (assuming the Taxi Mafia hasn't had them banned in your city).
You get to the resto and enjoy a meal with your friends, it's a nice place and somewhat expensive, you come to pay, the bill is reasonable and you think "I will pay with UPI", you try paying, it's a business account so should be OK! NO.... You have exceeded your first-day limit! Waiter tells you there is no card machine, and they have no change for cash...
Eventually you leave India, there's a non-trivial amount left in your tourist UPI account, you look for somewhere to withdraw it back to your card - no physical counters open at the airport, you request a withdrawal via the app... it never comes, the next month you get hit with a 500 INR inactivity fee, your visa expires and the app shuts down, next month 500 INR inactivity fee - can't make support requests through the app any more because your visa is no longer valid... Your balance slowly goes to 0 because you didn't think to spend every last rupee on your way out so it gets eaten by the system.
I say a small sub-1% fee on UPI is fine, it's great infrastructure when it works, but more needs to be done with global UPI integration. I have QR enabled payments available across maybe 10 different countries and India sticks out as being the one that's consistently an absolute pain and actively works against you.
Any experience or rec's for Thailand?
The history of payment systems is a history of risk. A quick primer,
All large-scale payment systems that interface with banks must have an answer for the inherent conflict between what the bank does (i.e. provide debt) and how it does it (by taking savings).
If the purpose of banks is to take capital from customers and use it to provide debt to others, then how much money should they keep for their customers' withdrawals and transfers?
If you do constant transfers back-and-forth 24x7 multiple times a second, then banks need a lot of capital at hand to manage the liability.
So even though gross settlement is supposed to be real-time, most RTGSes allow banks to borrow from their government's central bank via an "intra-day credit" system and then effectively net / settle at the end of the day, https://www.newyorkfed.org/research/epr/08v14n2/exesummary/e...
This loophole in a supposedly real-time system reduces the amount of money that banks "actually" owe each other. This allows banks to keep smaller reserves and provide greater amounts of capital to their customers.
You can see the different daily settlement points for the US here, https://www.federalreserve.gov/frrs/regulations/ii-federal-r...
But if you net only a few times a day, it creates risk. What if a bank becomes insolvent in between? Then it wouldn't be able to meet the obligations created by its customers, which would mean that other banks would fall short on their obligations and so on.
It's a network contagion effect; which is partly why the US Fed spent the better part of a decade studying counter-party risk in settlement systems before designing the latest version of its RTGS.
The Fed has protocols in place to stop such contagions before they start. Does the Indian government and its central bank? Where's the capital required going to come from? If a bank fails, who pays for its obligations? The Fed (currently) has a free infinite money glitch backed by the US Military, but the Indian government doesn't. So... where's that money going to come from?
Who is underwriting this system? Have they modelled systemic collapse? Because given what I've read about Indian banks and their bad debts, https://www.bbc.com/news/world-asia-india-58654740 it's a when not an if.
Cue a billion people panicking...
The government has yet to decide the rate or exactly where it will apply, but proposals under discussion include a merchant discount rate (MDR) of 0.3-0.5% - a small fee paid by a business to the banks and payment companies that process its UPI payments - on larger transactions at big businesses.
The government says consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free.
One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies.
That could generate a sizeable new revenue stream - up to a billion dollars, by one estimate - for banks and payment companies while leaving the everyday smaller payment to the neighbourhood grocer effectively unchanged.
As a happy user of UPI, I think is incredible. I want it to be more resilient, from our national economic standpoint. A (small as possible) fee, judiciously applied, will hopefully create generally constructive back-pressure on the digital side of the cash economy.
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Why the oxymoron; "digital side of the cash economy"?
Zero-cost-to-consumer one-rupee instant transaction system is basically cash economy. Because, at least here in India, our so-called "informal sectors" have switched wholesale to it in Metro to Tier 2 cities. Significantly in Tier 3 cities and smaller towns. And non-uniformly across rural / village panchayat areas.
UPI, and indeed, digital transaction uptake essentially hews close to the availability of reasonably reliable grid electricity and mobile Internet connectivity and access to banking services. The abundance of low-cost UPI-capable devices is useful only if these precursors are useful.
Reasonable fee as an economy-scale tuned mass-damper.
I hope the result of applying merchant-fee-as-back-pressure, at any size of transactions, translates into a sizeable up-tick in hard cash transactions. Nations of people that want to remain sovereign and democratically-run, ought to incentivise heterogeneity of money flow mechanisms. Especially, they/we, the people, must ensure, through our democratic influence as citizens, that a sizeable portion of the/our economy is person-to-person hard cash transactions.
And this provides a measure for "is the fee punitive?". Let's say, hypothetically, India's money supply mechanism is resilient if about 75% of money supply is digital, and 25% is hard currency. Anything outside this envelope is tending towards punitive costs on the people, both as tax payers and as transaction-fee-payers. Our central bank could manage the money mix, through judiciously tuned per-transaction fee on UPI and other digital payments, not unlike managing the volume of banknotes in circulation. The digital printing press is infinite money, if the effective fee is zero (psychologically). Sometimes, you want to make the fee zero, to bring it all into balance again, but most times, you want to create some friction to keep it from becoming a nation-state level attack vector (whether self-goaled or externally inflicted).
Crypto currencies and/or CBDCs are emphatically NOT the answer for such resilience.
I'd go so far as to argue that those forms of currency undermine (pun intended) sovereign economic resilience, where "sovereign" includes the little guy as much as it does a multinational or a country.Crypto system infrastructure is brittle by design and construction. Its effective use is predicated on the magical availability of wildly complex planet-scale electrical and communication infrastructure, not to mention dedicated tending-to of fast-decaying compute hardware, by literally every single participant in the network. A USB stick of gold-brick valued crypto, buried in the backyard is not at all equivalent to a brick of solid gold buried in the backyard.
Digital money systems make top-echelon black-box corruption easy. Hard cash makes it hard.
Recent years have made it patently obvious that digital-first money flows are wide open to centrally-controlled and/or monopolistic manipulation by individuals in power.
Consider the logistics of managing USD 1M in small bills. Hell, even USD 100 bills because 1M of those is about 10 Kilograms of paper mass (or about 22 pounds for you non-SI enjoyers (why?)). Now you need a large handbag, or a cool trench coat with several large pockets.
Multiply 1M in USD 100 bills, by 1,000, for billion-dollar corruption. That is 10,000 Kg of paper bills alone. Now, add to that, the industrial pallets, containers, and packing material to hold it all sensibly. Let's say 1,000 Kg for each such cash pile.
More paper-napkin arithmetic: [dead] never_inline ↗ [dead] autoexec ↗ Forcing people to scan a QR code to get a price and pay is a great way to charge people different prices based on whatever data you have on them. Everybody is just taking photos never knowing what the last person to take a photo was asked to pay for the same product. potato-peeler ↗ Incorrect. Price is displayed upfront, inclusive of taxes. uwagar ↗ if everything the govt provides has to be levied a fee, what is the tax collected for? oh probably buying weapons from usa, israel, uk, france and russia? attila-lendvai ↗ that is how you can maximize the "income": max inflation (printing) until people complain... max taxes until people complain... max fees, until people complain... digitalPhonix ↗ > Servers have to run, transactions settled, fraud detected and the system protected against cyberattacks. For years, the government has helped compensate banks and payment firms for providing a service that has effectively been treated as public infrastructure. maxglute ↗ What's refund/dispute like in India?
IOW, introduce multiple names for the same thing to hide it behind confusing complexity.
Sounds like it should just be public infrastructure and the government pays to maintain it.
Governments have paid to maintain a finance system since the introduction of token money (by minting the currency as a public good; also funding policing to prevent counterfeit) so this is effectively the same.