The issue of service charges levied by banks on credit and debit card transactions at petrol pumps was taken up in taken up in Parliament in the recently concluded winter session by a Lok Sabha member.
A parliamentarian raised a volley of questions to the government about the service charges imposed by banks on credit and debit card usage at petrol pumps. He sought to understand their impact on promoting digital payments and reducing cash usage in the economy.
In response, the government addressed his queries, clarifying its stance and the role of the Reserve Bank of India (RBI) in regulating such charges.
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Are service charges levied at petrol pumps?
Rajeev Rai, a Member of Parliament, asked whether the government is aware of service charges imposed by banks on credit and debit card usage at petrol pumps. He further inquired about the rationale behind such charges and whether they impede the goal of a cashless economy.
Responding to these queries, the Minister of State in the Ministry of Finance, Pankaj Chaudhary, stated:
“The Reserve Bank of India (RBI) in its Discussion Paper on Charges in Payment Systems dated August 17, 2022, stated that charges for payment services should be reasonable and competitively determined for users while also providing optimal revenue stream for the intermediaries. An effective payment system operation necessitates the proper determination of fees, charges, and prices to guarantee minimal costs for the users while providing suitable returns for the operators.”
He further added: “The optimal scenario would involve allowing the market forces to dictate these cost-related structures, taking into account demand, supply, growth and user needs. Thus, the imposition of charges by the banks should not hinder the objective of reducing cash usage in the economy as long as it encourages greater adoption of digital payment channels.”
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Timeline for removal of service charges
When asked whether the government has set any timeline for the removal of these service charges, Pankaj Chaudhary clarified: “RBI has informed that they have not issued any instructions in this matter.”
Implications for digital payments
The response from the government highlights that the imposition of service charges on card transactions at petrol pumps is currently dictated by market forces rather than direct regulatory mandates.
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