'India Could Become Cash Economy Again': Ashneer Grover Slams Possible Charges On UPI Transactions Above ₹2,000

BharatPe co-founder Ashneer Grover has criticized the potential introduction of charges on Unified Payments Interface (UPI) transactions, warning that it could potentially push India back to a cash-driven economy. Speaking to CNN-News18, Grover stated that imposing fees on a payment system that has already demonstrated its effectiveness is nonsensical, questioning why the government felt the need to interfere with a system that functions well.

The government's decision to prohibit banks and payment providers from charging users on UPI transactions up to Rs. 2,000, while allowing fees on larger transactions, has sparked debate. Grover took issue with the chosen cutoff, arguing that the threshold disproportionately impacts the majority of UPI transactions, which account for 66% of the system's total value but constitute only 4% of transactions by volume.

By allowing charges on larger transactions, Grover warned that merchants could potentially refuse UPI payments above the threshold and instead push customers toward cash, leading to a potential resurgence in cash usage. This, he cautioned, would result in increased ATM usage, higher cash-handling expenses for banks, and overall higher costs that may not generate enough revenue to justify the introduction of fees.

Grover also pointed out that the government's proposed revenue model may not be necessary, citing the Reserve Bank of India's substantial surplus transfer to the government, total listed bank profits, and the pre-tax surplus of the National Payments Corporation of India (NPCI).