NRIs from 10 countries can use UPI with their international mobile numbers

What’s in today’s article?

• Why in News?
• What are the Benefits of NPCI Notification and Who will Receive them? 
• What is the Discussion on Merchant Discount Rate (MDR)? 
• Where does UPI Stand Now?

Why in News?

• According to a notice by the National Payments Corporation of India (NPCI), non-resident account types that have international mobile numbers will now be allowed to transact with Unified Payments Interface (UPI).
• Consequently, the Union Cabinet approved an incentive scheme (with an outlay of ₹ 2,600 crore) for the promotion of RuPay debit Cards and low­ value BHIM ­UPI transactions (person­ to­ merchant) in FY 2022­-23.

What are the Benefits of NPCI Notification and Who will Receive them? 

• Non-­resident accounts such as non­-resident external accounts (NRE) and non­-resident ordinary accounts (NRO), having international numbers, will now be allowed into the UPI payment system. 
• NRE accounts are those used by non-­residents Indians (NRIs) to transfer earnings from foreign soil to India while NRO accounts are used to manage income earned in India (rent, interest, pension, etc) by NRIs. 
• The NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.  
• At present, users from 10 countries will be able to avail the facility – Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.  
• The development would allow NRIs to – 
• Use the payment method for making utility bill payments for their families (or themselves) in India, 
• Make purchases from e­-commerce or online platforms and 
• Make payments to physical merchants who accept UPI QR based payments when they travel to India. 
• Currently, all the internal systems as well as ecosystem players such as banks, NPCI, etc., only understand India-based mobile numbers for UPI transactions. 
• With this enablement, a significant number of systems will need infrastructural and technological changes required to support such payments.

What is the Discussion on Merchant Discount Rate (MDR)? 

• MDR (alternatively referred to as the Transaction Discount Rate (TDR)) is the sum total of all the charges and taxes that a digital payment entails. 
• For instance, the MDR includes bank charges, which a bank charges customers and merchants for allowing payments to be made digitally. 
• Similarly, MDR also includes the processing charges that a payments aggregator has to pay to online or mobile wallets or indeed to banks for their service.
• Presently, there is no MDR charge levied for RuPay ­based debit card and UPI transactions. 
• In 2022, the Finance Ministry stated that it was not planning to levy any charges for UPI services and the concerns of the service providers for cost recovery have to be met through other means. 
• The Reserve Bank of India (RBI) and various stakeholders expressed concerns about the potential adverse impact of the zero MDR regime on the growth of the digital payments’ ecosystem. 
• The NPCI requested the incentivisation of BHIM­ UPI and RuPay debit card transactions to –
• Create a cost effective value proposition for ecosystem stakeholders, 
• Increase merchant acceptance footprints and 
• Faster migration from cash payments to digital payments.

Where does UPI Stand Now? 

                          

 Image Caption: Architecture of UPI in India

• As of latest available data, 6,779.6 million transactions worth about ₹10.95 lakh crore have been facilitated using UPI. 
• In the previous calendar year, excluding one month of fall (between January and February), UPI transactions have been on an upward trajectory. 
• As per the DigiDhan dashboard maintained by the Ministry of Electronics and Information Technology, BHIM­ UPI accounted for 52% of all digital payments in FY 2021­-22 and at present it stands at 59.74%.

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Q1) What are the NRE/NRO accounts? Do they come under the UPI payment system?

NRE accounts are those used by non-­residents Indians (NRIs) to transfer earnings from foreign soil to India while NRO accounts are used to manage income earned in India (rent, interest, pension, etc) by NRIs. According to a notice by the National Payments Corporation of India (NPCI), such accounts will now be allowed to transact with UPI.

Q2) What is the Merchant Discount Rate (MDR)? 

MDR/ Transaction Discount Rate (TDR)) is the sum total of all the charges and taxes that a digital payment entails. For instance, the MDR includes bank charges, which a bank charges customers and merchants for allowing payments to be made digitally.

Source: NRIs from 10 countries can use UPI with their international mobile numbers  |  TH   |  Mint

Video: https://www.youtube.com/watch?v=s0hdiDyBOTg