Fintech
Budget 2024: Fintech Sector Seeks Investment in Public Digital Infrastructure, UPI Fees and More
Mumbai: Fintech companies have a long list of demands and expectations from the upcoming Union Budget, such as investments in public digital infrastructure, GST exemption for commercial correspondent (BC) counters and a fee structure for UPI payments.
“We strongly urge the finance minister to prioritize critical solutions like enhancing digital infrastructure, financial education initiatives and AI-based credit assessments within financial institutions to improve lending decisions and automate lending processes,” said Ankit Ratan, co-founder and CEO of Signzy, which offers a digital onboarding solution for banks, non-banking financial companies (NBFCs) and other financial institutions.
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Other suggestions include effective security policies and measures to limit cyber threats and fraud, support for open banking policies, a cloud payments platform for banks, strengthened public-private partnerships, and investments in advanced technologies such as artificial intelligence and blockchain.
“The budget can support growth with clearer regulations, tax exemptions and lower capital costs, increasing profitability. We expect the upcoming budget to unlock new opportunities by enabling access to financial products through partnerships between large public sector banks and fintechs,” said Bipin Preet Singh, co-founder and CEO, MobiKwik.
Dilip Modi, founder and CEO of Spice Money, has called for a GST exemption on services offered through British Columbia branches to reduce tax burdens and operating costs and make it easier for fintech companies to offer financial services in rural and remote areas.
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The sector is also seeking clarity on new lending guidelines and practices, as well as measures to support innovation and improve the digital lending ecosystem, particularly SME lending.
UPI Transaction Fees
A key demand is to introduce fees for UPI payments in phases to create monetization opportunities. “The government should consider charging fees for digital payments like UPI, which will enable banks to build robust payment infrastructure and security standards that enable fast, easy and secure payments while protecting consumers from fraud and cybersecurity threats,” said V Balasubramanian, CEO, Financial Software and Systems.
Read also: To support the UPI ecosystem, a modest fee is enough
Others like Rahul Jain, CFO, NTT DATA Payment Services India, have also called for a subsidy on the merchant discount rate (MDR) charged for UPI transactions via credit cards to make the business model more viable. Currently, a 2% MDR is levied on RuPay credit card transactions linked to UPI. Of this, 1.5% goes to the card issuing bank while the rest is shared between the card network and the merchant’s acquiring bank.
“Simplifying and expediting the licensing process, creating an adequate mechanism to ensure the security of digital payments, and putting in place infrastructure and other targeted initiatives will further boost the scale and volume of digital transactions,” Jain said.
Gaurav Jalan, founder and CEO of mPokket, was optimistic that the government would continue to see fintech as a key driver of easy access to credit and a job creator. “We therefore expect a favorable approach to investment in the sector and clarity on the regulatory discussions that are open,” he said.
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