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
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.
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.
EU laws get written in 24 languages - and the CJEU (the equivalent of SC) doesn't give precedence to any one "master" language. These arguments for a "master-language" (let alone a foreign one), by both Hindi/Tamil nationalists, are cliched and threadbare.
In my opinion, these are just excuses for continued colonial-era English-imposition - because it's often only the aforementioned section that makes such brain-dead arguments.
For all the politically-ostentatious love of their own mother-languages there's not a single technical-university of any great reputation in either of these (it's worse in other Indic languages). The economic-value of these languages is close to zero if not negative.
Sheldon Pollock notes that, even in classical studies and literature, the institutions have turned utterly incompetent and filled with political retainers who can barely hold a mantle to people from previous generations who were experts in linguistics and manuscriptology.
Comments like these do injustice with Indian constitution which grants:
1. Protection of Language and Script (Article 29)
Article 29(1): "Any section of the citizens... having a distinct language, script or culture of its own shall have the right to conserve the same.
Article 29(2): "No citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them."
Article 30(1): "All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice."
Article 350: "Every person shall be entitled to submit a representation for the redress of any grievance to any officer or authority... in any of the languages used in the Union or in the State..."
Article 350. Language to be used in representations for redress of grievances- Every person shall be entitled to submit a representation for the redress of any grievance to any officer or authority of the Union or a State in any of the languages used in the Union or in the State, as the case may be.
Article 350A. Facilities for instruction in mother-tongue at the primary stage - It shall be the endeavor of every State and of every local authority within the State to provide adequate facilities for instruction in the mother-tongue at the primary stage of education to children belonging to linguistic minority groups; and the President may issue such directions to any State as he considers necessary or proper for securing the provision of such facilities.
Article 350B. Special Officer for linguistic minorities-
There shall be a Special Officer for linguistic minorities to be appointed by the President.
It shall be the duty of the Special officer to investigate all matters relating to the safeguards provided for linguistic minorities under this Constitution and report to the President upon those matters at such intervals as the President may direct, and the president shall cause all such reports to be laid before each House of Parliament and sent to the Government of the States concerned.
The only unequal part which is only applicable to Hindi and not other languages:
Article 351. Directive for development of the Hindi language- It shall be the duty of the Union to promote the spread of the Hindi language, to develop it so that it may serve as a medium of expression for all the elements of the composite culture of India and to secure its enrichment by assimilating without interfering with its genius, the forms, style and expressions used in Hindustani and in the other languages of India specified in the Eighth Schedule, and by drawing, wherever necessary or desirable, for its vocabulary, primarily on Sanskrit and secondarily on other languages.
Amendment Act Year Languages Added Resulting Total
Original Constitution 1950 14 Original Languages 14 languages
21st Amendment Act 1967 Sindhi 15 languages
71st Amendment Act 1992 Konkani, Manipuri, Nepali 18 languages
92nd Amendment Act 2003 Bodo, Dogri, Maithili, Santhali 22 languages
96th Amendment Act 2011 "Oriya" to "Odia" 22 languages
Doubt in Germany a user can submit documents in French and can get have special protection by Germany for promoting French language.
These laws mean zilch - the state of Karnataka, which hosts Bengaluru, where demagogues routinely raise Xenophobia based on language, has exactly 1-school that teaches Science/Mathematics at the high-school level (PUC, 11/12th) in Kannada.
Try using these "laws" and "rights" when you're trying to apply for a university, or asking a IIT to teach you in Hindi/Tamil LOL. These provisions are mostly used to skirt around the (generally onerous) laws by so-called "minority institutions" (eg. Manipal).
It's very disingenous to make such arguments by anyone with their eyes open in India. It's almost like the classic quip (almost a criticism of proto-liberalism) about the British empire: everyone is free in it as long as he's British!
Indians will go to Germany and learn German; go to Japan and learn Japanese; but will resist building anything of value with the culture/language of their own states of residence. The Anglophone-Indians will religiously preach a particularly seductive form of nationalist-liberalism internally for India that continues all the colonial structures of the British empire, because it helps them optimize for their own economic outcomes (ofc. they do this internationally too).
Absurd state of affairs tbh - and it has (eg. Blume Ventures' report) and will keep India poor with the wealth limited to ~5-10% of the population.
Last I checked, the Union Govt is not going around imposing English everywhere like they are pushing Hindi.
Also India's wealth is always going to be limited to 5-10℅ of the citizenry. India is pretty much USA on steroids at this point - a handful of capitalists controlling a lot of public infrastructure, ministers openly indulging in corruption, routine exploitation of the working class, piss poor healthcare and education provision where they try to skirt around the evolution question and Gandhism. The bowing down of India to the US is no surprise, given all of these other factors already playing around in the background.
> Doubt in Germany a user can submit documents in French and can get have special protection by Germany for promoting French language.
I did submit a non-German language document to get my German citizenship.
At the end, whatever you say - India is f*ked up by regional politics. With English a poor person from region A can go to B and find some job/livelihood.
Are you against it? I understand you want homogeneity - it is not there.
But people like you creating divisions by telling
>>>> It shall be the duty of the Union to promote the spread of the Hindi language, to
will promote more chaos. Good for rest of the rich world especially west and China.
Like my physics teacher used to say in Chennai... We don't need foreigners to mess us - We Indians do it for us.
All you want is India to fight like Arab states - internally. Divide and conquer. Thank you from the West and China.
Making it 45 languages etc will not solve issues. The point is not master or slave. Stop that victim mindset.
If people follow law and order all will be fine. Telling reputation etc is all good. Foreign people study and celebrate Indic languages better. Foreign institutes spend more grants in that.
> there's not a single technical-university of any great reputation in either of these (it's wor
It was tried in S.India - Anna University. Very few people joined to do B E in Computer Science Engg.
The real question is every ruler wants to keep population stupid.
You still celebrate people like NarayanaMoorthy or L& T chairman. biju or ola CEOs lying in public.
At the end, there is endemic corruption. Blaming UK or West will not solve anything.
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.
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.
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.
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.
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.
It goes both ways: What if the ONLY payment method was the one approved by your "elected" government. A balance where they can all exist is the best, and most difficult decision.
Currency is already managed by the elected government, and every democracy in the world traces electronic transactions. Some (like Italy) forbid cash payments in large sums altogether. So what's the boogieman here?
Currency is a barriers bond that affords a degree of decentralisation-in-operation and use that isn't afforded by digital payments, even crypto for practical purposes.
The boogyman is just what you described, and every democracy in the world absolutely does not trace electronic transactions.
Some have a more hands off approach, including size of transactions and flagged behaviour as indicators of when payment processors must report to the government.
The Goverment should absolutely have no idea who spends what, where. Warrants and court orders, check values should be required before anyone can know. The potential to suppress political opponents, to squelch legitimate protest, to interfere with elections, is too dangerous.
Simply because some countries, like the US after 9/11, decided to give up this aspect of a free people, does not make it right.
The Italian government has no power over foreign cards, and will be careful to not hinder those transactions lest they want to lose their tourism income.
Yes, and this is a bad thing, and free societies are impossible without the possibility of payments that the government doesn’t want you to be able to make.
Cryptocurrency solves that problem well, which is why governments have moved hard to effectively nerf it everywhere.
Visa and Mastercard don't, but right now cash more or less does. If the state has a monopoly on digital payments, and can thus mass surveil all digital payments without any scrutiny, the state has a huge incentive to disincentivize or bar the use of cash. Then all it takes is a bad actor to come into power and abuse the system.
Payment rails are a natural monopoly so yeah I’m good with the gov owning it and as the article says, everyone is free to compete with the services they offer.
Fixed it for you. You had left some extraneous quotation marks there.
Either way, while governments should not get free pass and should be scrutinized by its citizens, we definitely should not allow corporations with ties to hostile governments (such as the case of Visa and Mastercard) any oversight of payment infrastructure.
> What if the ONLY payment method was the one approved by your "elected" government.
Yeah, what if?
You didn't provide any argument, didn't point to any real problem. You just hinted at a "terrible bad thing". Would we have monsters under our beds or bad guys in corners to ambush us?
This sounds like VISA/Mastercad/Apple Pay playing FUD[1].
You realize you're arguing for a monopoly, right? One where competition is not only non-existent but also illegal, and which has complete control over how you're allowed to spend your money.
I think arguing "but it's a democratic monopoly" is little comfort in this situation. Maybe you trust your government not to ever be incompetent or to use the powers granted by this monopoly in a way you disapprove of. Maybe in the short term you'd even be right to do so. But I think history has proven that over the long term that's a very foolish assumption to make.
Which is completely irrelevant because as the government of the country they have the power to make laws, now and in the future which compel private entities to perform actions like AML (anti money laundering) and KYC (know your customers).
The end result is private entities taking money out of the system at some stage, and it doesn't shield you in any way from government incompetence or malice.
Suppose you have an actually decentralized payment system, like cash, or any digital system that preserves the same properties whether or not it involves a blockchain.
An example of one that doesn't would be a global decentralized protocol for transferring money. You're standing in a coffee shop in LA and want to pay for a coffee so you tell your bank to transfer $5 to their bank. It works the same if your bank is in Brazil and their bank is in Switzerland as if both banks are in Nebraska, involves no intermediary other than each party's bank, and their bank shows them the transfer immediately so they know to give you the coffee.
Then the panzers roll into Washington and der Führer wants to reintroduce financial surveillance to make sure nobody is covertly buying a computer that doesn't censor the internet. Obviously they can force the bank in Nebraska to inform on the dissidents, but your bank is in Brazil and the seller's bank is in Switzerland.
Unless the system allowing that is dismantled ahead of time so the dystopia can be switched on overnight instead of needing years to erode entrenched decentralized infrastructure.
You go far enough on fiscal tracking and you just wind up back where we've always been: barter. All currency is as useful as the regime backing it, and when that regime falls, barter always comes back in. Everything else is just rent seeking scaffolding to reduce barter friction (cash let's me store all the value I've created, but so could gold bars, or bitcoin, or vodka).
This is to say: All currency is about control and convenience (you trade "invisible transaction" for "easily able to resolve payment") because those in power want to know/control the money and everyone else wants convenience.
> You realize you're arguing for a monopoly, right?
Right! Like all the other monopolies that governments already have: public security (police and courts of law), external security (armed forces), public healthcare in many civilized countries, inspection of health regulations and consumer safety, monetary policy, etc.
> you trust your government not to ever be incompetent
Oh, I don't. But Apple, Visa, Mastercard and Google Pay aren't very "competent" either.
> history has proven that over the long term
History has proven that privatization of many of government monopolies are disastrous: Roman generals making private armies and destroying the Republic, abuse of forced labor from inmates in private prisons, exorbitant fees from payment providers (Visa, Mastercard), food dangerous for public consumption because the governments didn't inspect them, etc.
> Like all the other monopolies that governments already have
Your examples are things that aren't inherently monopolies and are significantly worse if you try to make them such. It's better to give people the right to self-defense than to put them in jail for violating a "public security" monopoly for not allowing someone else to kill them when there were no police around. It's cruel to prohibit someone from paying for their own healthcare in cases when the procedure exists but the public system won't spend the money. What argument could you even make for prohibiting private inspections of products and services the likes of Consumer Reports?
The things that are better as a monopoly are so rare that they plausibly don't exist.
> But Apple, Visa, Mastercard and Google Pay aren't very "competent" either.
The article doesn't say and I know nothing about India. I could guess consumers are oaying using their smartphones. So Google/Apple duopoly are still the gatekeepers to use UPI making huge profits. Of course using one of the American backends would make their control and profits orders of magnitudes bigger.
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.
The main thing that makes card transactions more expensive is the merchant bank assuming chargeback risk, but that's because card payments are an entirely different transaction type. Pix is digital cash. You typically cannot get refunded for any reason. Cards are not digital cash. You can get refunded for fraud and unauthorized transactions.
> 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.
Notice that this is entirely a regulatory problem. Do we imagine that entrepreneurs in the US can't produce the technology for a good payments system? That's not the reason. The reason is that anyone who wants to build it gets squished by the regulators captured by Visa and Mastercard because they don't want anything that would take away their cut.
Zelle made it through by having various limitations that make it hard for it to displace credit cards, and even that took decades before it happened.
It’s not just about cost, it’s about control and sovereignty. Other countries do not want to have their payment systems rug pulled at the whim of whomever US voters decide to put into office each election cycle. The cost to build your own is reasonable compared to what losing the capability costs.
“Fool me once, shame on you. Fool me twice, shame on me.”
> Other countries do not want to have their payment systems rug pulled at the whim of whomever US voters decide to put into office each election cycle.
Which is the reason the US is also shooting itself in the foot every time it rug pulls them.
If you want people to trust and rely on your thing then you kind of need to avoid being untrustworthy and unreliable.
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.
> 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.
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.
>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
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
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).
> 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
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.
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.
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.
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.
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.
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.
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.
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?
Smaller, in fact, than what they pay in their own country for credit card fees.
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.
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..)
>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
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
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.
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.
> it's been an absolute nightmare for a tourist to play along.
But the solution to this should be to simplify the tourist experience and to allow payments from foreign banks and cards. Traveling to China has a huge hassle in the late 2010s due to everyone local switching to WeChat/Alipay but it not being available for tourists, but in the last few years (I last visited in 2023), you could use WeChat/Alipay with a non-China bank card.
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.
> 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 of D1/D3/Thao Dien/Da Lat/Da Nang/Hanoi and we resort to her Vietcombank account).
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/Digital and DMart or QuickCommerce platforms like Blinkit 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.
But my SO and I never understood the tay ba lo mindset. Catering to them is what kept Thailand and the Dominican Republic stuck in tourism-induced Dutch disease because it incentivizes extractive and low productivity economic sectors like real estate and low skill services at the expense of human capital development and investing in high productivity industries.
> 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, and this wasn't some plot to extract money from the gora, they genuinely didn't have and couldn't find small bills.
In the end they tried to wave it off and discount my meal by 40 rupees or something, and I rounded up by 60 instead. And I remember thinking I probably just created another problem, because now they need to balance the books and parcel out the cash tip without change.
> 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
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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.
> 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.
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?
> 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.
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.
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.
I would like to know where that 1% retail business is located. My family has a bunch of hardware/electricity retail businesses and the margins are way more than that. Like 30%-500%.
You mean subsidized wares that is priced for loss to lure masses to cheap shopping, while selling other stuff above the price? Like buying liquors like rum and whiskey in european supermarkets is almost guaranteed to give cca 2x the price of cheapest online sellers in same country. Thats age old tactic, you need to look at overall sums spent or prices across the offer
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.
Only the interchange is capped. The merchant has to also cover network and processor fees. And then there are some uncapped transaction supposedly so the fee covers this risk. Comes out to 0.6-0.7% for a smaller merchant with the card present.
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.
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.
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.
Right, this has second and third order effects. I am sure this must have been brought up during the discussions and overruled for whatever reason. The bureaucrats and politicos involved are not stupid. But there is some game being played here.
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.
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.
That is true yes. The interchange fees tend to be the largest component though. The ECB reports that the average transaction cost of debit is 0.44% [1]
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.
> 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.
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.
Unfortunately Moreta disabled Thai PromptPay QR payments recently except for US KYC'd people due to some compliance dispute. There's also lbank.com but I can't confirm if they currently work in Thailand (lbank has an... interesting reputation, I can only use it via TestFlight, but works for my daily food spend needs)
Otherwise you're stuck with AliPay+ merchants (easy via Wise) or TAGTHAi which should still work but is expensive and sucks.
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I forgot about https://p2p.me - they're taking the regulatory arbitrage 'personal travel payment concierge service' approach, basically "work around the problem, not with it" as the founders realized the people making the regulations neither know nor care about on-the-ground practicalities.
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.
...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.
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?
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.
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 [0]. 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.
Further, add to that the real-world infrastructure and organisational capacity to construct, maintain, secure, transport, and otherwise manage the infrastructure needed to hold and deploy your USD 1Bn in hard cash. This staggeringly capital-intensive exercise is subject to economies of scale.
These facts of life make it that much harder for anybody, especially enemy nation-state actors, to physically perpetuate large-scale money-supply based corruption of the kind being increasingly perpetuated by individual people, in private and public life, because they are able to exercise state-level power over digital economies.
Furthermore, currency notes are ridiculously hard to counterfeit --- AFAIK Indian banknotes (and US ones) are among the most secure (as in transaction-trust-secure) forms of monetary exchange humans have crafted.
Printing and injecting those into an economy at scale, to launch an inflation-attack requires nation-state level capacity at multiple levels, and the geopolitical incentive to do so. And if they do, it does not remain surreptitious for long.
Co-opting money systems, especially crypto-currencies to private ends and/or a offensive economy-destabilising tools, is trivial in comparison. You don't need to launch a 51% attack on the ledger. You just need a big enough psychological spanner, delivered into everyone's infinite brainrot feeds, to make 'em believe in The One True Currency; one that benefits you personally the most, obviously...
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.
Pennywise, pound foolish decision.
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
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.
The American Empire is alive and well.
Cards are so backward in 2026. To carry them should by itself make one shudder.
In NSW you can tap your Opal reader with your card.
A card that is using Mastercard, Visa, or American Express; no EFTPOS support.
Indeed. https://developer.mastercard.com/success-stories/transport-f...
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.
> mandated to be written in this foreign language that'
I am sure people from the Northern belt would be happy if the laws were written in Tamil (my mother tongue).
EU laws get written in 24 languages - and the CJEU (the equivalent of SC) doesn't give precedence to any one "master" language. These arguments for a "master-language" (let alone a foreign one), by both Hindi/Tamil nationalists, are cliched and threadbare.
In my opinion, these are just excuses for continued colonial-era English-imposition - because it's often only the aforementioned section that makes such brain-dead arguments.
For all the politically-ostentatious love of their own mother-languages there's not a single technical-university of any great reputation in either of these (it's worse in other Indic languages). The economic-value of these languages is close to zero if not negative.
Sheldon Pollock notes that, even in classical studies and literature, the institutions have turned utterly incompetent and filled with political retainers who can barely hold a mantle to people from previous generations who were experts in linguistics and manuscriptology.
So much for "Hindi/Tamil..." pride...
Comments like these do injustice with Indian constitution which grants:
1. Protection of Language and Script (Article 29)
Article 29(1): "Any section of the citizens... having a distinct language, script or culture of its own shall have the right to conserve the same.
Article 29(2): "No citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them."
Article 30(1): "All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice."
Article 350: "Every person shall be entitled to submit a representation for the redress of any grievance to any officer or authority... in any of the languages used in the Union or in the State..."
Article 350. Language to be used in representations for redress of grievances- Every person shall be entitled to submit a representation for the redress of any grievance to any officer or authority of the Union or a State in any of the languages used in the Union or in the State, as the case may be.
Article 350A. Facilities for instruction in mother-tongue at the primary stage - It shall be the endeavor of every State and of every local authority within the State to provide adequate facilities for instruction in the mother-tongue at the primary stage of education to children belonging to linguistic minority groups; and the President may issue such directions to any State as he considers necessary or proper for securing the provision of such facilities.
Article 350B. Special Officer for linguistic minorities-
The only unequal part which is only applicable to Hindi and not other languages:Article 351. Directive for development of the Hindi language- It shall be the duty of the Union to promote the spread of the Hindi language, to develop it so that it may serve as a medium of expression for all the elements of the composite culture of India and to secure its enrichment by assimilating without interfering with its genius, the forms, style and expressions used in Hindustani and in the other languages of India specified in the Eighth Schedule, and by drawing, wherever necessary or desirable, for its vocabulary, primarily on Sanskrit and secondarily on other languages.
Doubt in Germany a user can submit documents in French and can get have special protection by Germany for promoting French language.These laws mean zilch - the state of Karnataka, which hosts Bengaluru, where demagogues routinely raise Xenophobia based on language, has exactly 1-school that teaches Science/Mathematics at the high-school level (PUC, 11/12th) in Kannada.
Try using these "laws" and "rights" when you're trying to apply for a university, or asking a IIT to teach you in Hindi/Tamil LOL. These provisions are mostly used to skirt around the (generally onerous) laws by so-called "minority institutions" (eg. Manipal).
It's very disingenous to make such arguments by anyone with their eyes open in India. It's almost like the classic quip (almost a criticism of proto-liberalism) about the British empire: everyone is free in it as long as he's British!
Indians will go to Germany and learn German; go to Japan and learn Japanese; but will resist building anything of value with the culture/language of their own states of residence. The Anglophone-Indians will religiously preach a particularly seductive form of nationalist-liberalism internally for India that continues all the colonial structures of the British empire, because it helps them optimize for their own economic outcomes (ofc. they do this internationally too).
Absurd state of affairs tbh - and it has (eg. Blume Ventures' report) and will keep India poor with the wealth limited to ~5-10% of the population.
Last I checked, the Union Govt is not going around imposing English everywhere like they are pushing Hindi.
Also India's wealth is always going to be limited to 5-10℅ of the citizenry. India is pretty much USA on steroids at this point - a handful of capitalists controlling a lot of public infrastructure, ministers openly indulging in corruption, routine exploitation of the working class, piss poor healthcare and education provision where they try to skirt around the evolution question and Gandhism. The bowing down of India to the US is no surprise, given all of these other factors already playing around in the background.
> Doubt in Germany a user can submit documents in French and can get have special protection by Germany for promoting French language.
I did submit a non-German language document to get my German citizenship.
At the end, whatever you say - India is f*ked up by regional politics. With English a poor person from region A can go to B and find some job/livelihood.
Are you against it? I understand you want homogeneity - it is not there.
But people like you creating divisions by telling
>>>> It shall be the duty of the Union to promote the spread of the Hindi language, to
will promote more chaos. Good for rest of the rich world especially west and China.
Like my physics teacher used to say in Chennai... We don't need foreigners to mess us - We Indians do it for us.
All you want is India to fight like Arab states - internally. Divide and conquer. Thank you from the West and China.
TL;DR Tamil Nadu should ... be its own country?
It doesn't sound like a particularly large leap to think that polities as large as the Indian federal states could work as countries.
> colonial-era English-imposition
Making it 45 languages etc will not solve issues. The point is not master or slave. Stop that victim mindset.
If people follow law and order all will be fine. Telling reputation etc is all good. Foreign people study and celebrate Indic languages better. Foreign institutes spend more grants in that.
> there's not a single technical-university of any great reputation in either of these (it's wor
It was tried in S.India - Anna University. Very few people joined to do B E in Computer Science Engg.
The real question is every ruler wants to keep population stupid.
You still celebrate people like NarayanaMoorthy or L& T chairman. biju or ola CEOs lying in public.
At the end, there is endemic corruption. Blaming UK or West will not solve anything.
It’s written in English because it’s the language spoken by the educated.
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.
Hong Kong also uses English.
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.
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.
> Both sides are getting something out of it
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.
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.
Respect to China who foresaw this and built a massive economy without using anything of US.
Brazil faces similar pressures from credit card companies via Trump. We're cutting them out of their precious profits and they don't like that.
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.
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...
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.
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.
https://en.wikipedia.org/wiki/Exorbitant_privilege
https://news.ycombinator.com/item?id=48994782
https://news.ycombinator.com/item?id=48415854
Something like Pix is a great blueprint for the future imo.
I don’t want international private companies controlling payments, better have my own elected government manage it.
I don't want corporations controlling payments, but I don't want my government controlling payments either.
What I actually wanted was for the cryptocurrency dream to become reality, but it turned into stocks instead.
It goes both ways: What if the ONLY payment method was the one approved by your "elected" government. A balance where they can all exist is the best, and most difficult decision.
Currency is already managed by the elected government, and every democracy in the world traces electronic transactions. Some (like Italy) forbid cash payments in large sums altogether. So what's the boogieman here?
Currency is a barriers bond that affords a degree of decentralisation-in-operation and use that isn't afforded by digital payments, even crypto for practical purposes.
bearers* bond. Too late to edit.
The boogyman is just what you described, and every democracy in the world absolutely does not trace electronic transactions.
Some have a more hands off approach, including size of transactions and flagged behaviour as indicators of when payment processors must report to the government.
The Goverment should absolutely have no idea who spends what, where. Warrants and court orders, check values should be required before anyone can know. The potential to suppress political opponents, to squelch legitimate protest, to interfere with elections, is too dangerous.
Simply because some countries, like the US after 9/11, decided to give up this aspect of a free people, does not make it right.
AFAIK, in India, payments more than Rs. 50k is tracked.
In anycase, the governments have the capability, what remains is just the intend. And we see how intends could change at the whim of a leader.
They do trace and log them, though.
They do not. They have to get a warrant to get such logs from a bank.
The Italian government has no power over foreign cards, and will be careful to not hinder those transactions lest they want to lose their tourism income.
Yes, and this is a bad thing, and free societies are impossible without the possibility of payments that the government doesn’t want you to be able to make.
Cryptocurrency solves that problem well, which is why governments have moved hard to effectively nerf it everywhere.
> the possibility of payments that the government doesn’t want you to be able to make
The idea that visa and mastercard provide these ...
Visa and Mastercard don't, but right now cash more or less does. If the state has a monopoly on digital payments, and can thus mass surveil all digital payments without any scrutiny, the state has a huge incentive to disincentivize or bar the use of cash. Then all it takes is a bad actor to come into power and abuse the system.
No more so than with visa or mastercard, who already hand over data whenever, and hand it over to a foreign government on demand too.
This fear of government services is toxic americanism.
The alternatives still exist, there is just less and less reason to use them because they charge extra fees.
I'd have a very hard time spending other currencies than CAD to pay my bills.
Payment rails are a natural monopoly so yeah I’m good with the gov owning it and as the article says, everyone is free to compete with the services they offer.
The government can already order VISA to not accept your payment and/or just make it too cost-prohibitive. Without any real recourse from your side.
Direct government services typically have a universal mandate. The government won't be able to stop doing business with you.
> approved by your elected government.
Fixed it for you. You had left some extraneous quotation marks there.
Either way, while governments should not get free pass and should be scrutinized by its citizens, we definitely should not allow corporations with ties to hostile governments (such as the case of Visa and Mastercard) any oversight of payment infrastructure.
> What if the ONLY payment method was the one approved by your "elected" government.
Yeah, what if?
You didn't provide any argument, didn't point to any real problem. You just hinted at a "terrible bad thing". Would we have monsters under our beds or bad guys in corners to ambush us?
This sounds like VISA/Mastercad/Apple Pay playing FUD[1].
[1] https://en.wikipedia.org/wiki/Fear,_uncertainty,_and_doubt
You realize you're arguing for a monopoly, right? One where competition is not only non-existent but also illegal, and which has complete control over how you're allowed to spend your money.
I think arguing "but it's a democratic monopoly" is little comfort in this situation. Maybe you trust your government not to ever be incompetent or to use the powers granted by this monopoly in a way you disapprove of. Maybe in the short term you'd even be right to do so. But I think history has proven that over the long term that's a very foolish assumption to make.
Which is completely irrelevant because as the government of the country they have the power to make laws, now and in the future which compel private entities to perform actions like AML (anti money laundering) and KYC (know your customers).
The end result is private entities taking money out of the system at some stage, and it doesn't shield you in any way from government incompetence or malice.
Suppose you have an actually decentralized payment system, like cash, or any digital system that preserves the same properties whether or not it involves a blockchain.
An example of one that doesn't would be a global decentralized protocol for transferring money. You're standing in a coffee shop in LA and want to pay for a coffee so you tell your bank to transfer $5 to their bank. It works the same if your bank is in Brazil and their bank is in Switzerland as if both banks are in Nebraska, involves no intermediary other than each party's bank, and their bank shows them the transfer immediately so they know to give you the coffee.
Then the panzers roll into Washington and der Führer wants to reintroduce financial surveillance to make sure nobody is covertly buying a computer that doesn't censor the internet. Obviously they can force the bank in Nebraska to inform on the dissidents, but your bank is in Brazil and the seller's bank is in Switzerland.
Unless the system allowing that is dismantled ahead of time so the dystopia can be switched on overnight instead of needing years to erode entrenched decentralized infrastructure.
In my country they have to make laws to FORCE shops and restaurants to accept cash. Because it is a damn hassle.
You go far enough on fiscal tracking and you just wind up back where we've always been: barter. All currency is as useful as the regime backing it, and when that regime falls, barter always comes back in. Everything else is just rent seeking scaffolding to reduce barter friction (cash let's me store all the value I've created, but so could gold bars, or bitcoin, or vodka).
This is to say: All currency is about control and convenience (you trade "invisible transaction" for "easily able to resolve payment") because those in power want to know/control the money and everyone else wants convenience.
> You realize you're arguing for a monopoly, right?
Right! Like all the other monopolies that governments already have: public security (police and courts of law), external security (armed forces), public healthcare in many civilized countries, inspection of health regulations and consumer safety, monetary policy, etc.
> you trust your government not to ever be incompetent
Oh, I don't. But Apple, Visa, Mastercard and Google Pay aren't very "competent" either.
> history has proven that over the long term
History has proven that privatization of many of government monopolies are disastrous: Roman generals making private armies and destroying the Republic, abuse of forced labor from inmates in private prisons, exorbitant fees from payment providers (Visa, Mastercard), food dangerous for public consumption because the governments didn't inspect them, etc.
> Like all the other monopolies that governments already have
Your examples are things that aren't inherently monopolies and are significantly worse if you try to make them such. It's better to give people the right to self-defense than to put them in jail for violating a "public security" monopoly for not allowing someone else to kill them when there were no police around. It's cruel to prohibit someone from paying for their own healthcare in cases when the procedure exists but the public system won't spend the money. What argument could you even make for prohibiting private inspections of products and services the likes of Consumer Reports?
The things that are better as a monopoly are so rare that they plausibly don't exist.
> But Apple, Visa, Mastercard and Google Pay aren't very "competent" either.
The article doesn't say and I know nothing about India. I could guess consumers are oaying using their smartphones. So Google/Apple duopoly are still the gatekeepers to use UPI making huge profits. Of course using one of the American backends would make their control and profits orders of magnitudes bigger.
I encourage you to loudly champion such a model in your nation state to whomever is in power and will listen.
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.
The main thing that makes card transactions more expensive is the merchant bank assuming chargeback risk, but that's because card payments are an entirely different transaction type. Pix is digital cash. You typically cannot get refunded for any reason. Cards are not digital cash. You can get refunded for fraud and unauthorized transactions.
Visa debit, maybe, but they're way higher for Visa credit.
> 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 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.
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.
> Whereas if you give other countries the obvious win that they can stop paying ~3% of their entire economy to a foreign payments network
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
> 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.
Notice that this is entirely a regulatory problem. Do we imagine that entrepreneurs in the US can't produce the technology for a good payments system? That's not the reason. The reason is that anyone who wants to build it gets squished by the regulators captured by Visa and Mastercard because they don't want anything that would take away their cut.
Zelle made it through by having various limitations that make it hard for it to displace credit cards, and even that took decades before it happened.
> You can't use a debit card because of transaction limits and lack of consumer protections.
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.
Zelle is not actually instantaneous. It is a frontend to ACH. The clearing of transactions still takes days.
It’s not just about cost, it’s about control and sovereignty. Other countries do not want to have their payment systems rug pulled at the whim of whomever US voters decide to put into office each election cycle. The cost to build your own is reasonable compared to what losing the capability costs.
“Fool me once, shame on you. Fool me twice, shame on me.”
Europe Fights to Loosen America’s Grip on Payment Systems - https://www.bloomberg.com/news/articles/2026-06-16/europe-fi... | https://archive.today/o699I - June 16th, 2026
China nears launch of mBridge as alternative to Swift – report - https://news.ycombinator.com/item?id=48636931 - June 2026
> Other countries do not want to have their payment systems rug pulled at the whim of whomever US voters decide to put into office each election cycle.
Which is the reason the US is also shooting itself in the foot every time it rug pulls them.
If you want people to trust and rely on your thing then you kind of need to avoid being untrustworthy and unreliable.
The US spent a hundred years building up soft power and all it takes to sink it is one mad emperor.
If trust and reliability were a priority for America, we wouldn't be where we are today.
> US-India trade deals
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.
> 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.
* association I mean, not correlation.
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.
these mfs have no shame do they?
>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
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
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.
At no point in human history did the government not try to control currencies.
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).
> 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
Is "2pc" the same as 2%?
Yes. Habit from typing on the phone where the % sign is hidden away somewhere on my keyboard!
how does one become a farmer? seems like a good life. i'm indian btw.
While most transactions are smaller,
> 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...
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.
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.
Do rich farmers really have enough strength in numbers to outvote other populations in India?
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.
A large number of politicians are farmers. So...
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.
Don't forget no income tax on "agricultural income" even if that income is millions.
How is it financially sustainable?
Why to women?
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.
I wonder when Marx wrote "religion is opium for the masses" he had India in mind because goddamn it fits perfectly.
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.
This happened post COVID - to help poor. A few states did that - saw electoral gains. It is not nationwide.
There is also a misconception. It is not in all public transport. In TN state, it is on select buses - slower buses only.
In Kerala, its not for poor. Its for all women. If the women is traveling with a 5 year old boy, she has to pay for the boy though.
I wrote to serve poor. In a way, women are financially marginalised in most of humanity. So nothing wrong about that.
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.
Who will feed 1.5 billion people then? Being dependent on trump for corn and rice?
Bro thinks he can create more rice and wheat using `dd` command.
It's a bargain and exactly what governments are for. It's 70¢ per Indian. It's a payment highway and commerce is good.
edit: replied to comment was rephrased during reply.
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.
>it's been an absolute nightmare for a tourist
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.
What country doesn't? I hope more people learn about Monero.
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?
Smaller, in fact, than what they pay in their own country for credit card fees.
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.
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..)
>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
Read again, this time without whatever blinders you have on. Specifically after the "But let's say you accept that as a part of travelling..." part.
Sounds like it would be easier to hope for a better UPI experience for tourists.
In 2026, you think cash could become more common instead of less? There is no way that happens unless they jack the fee up and even then…
Tourists can get prepaid UPI.
https://www.npci.org.in/blog/upi-one-world-your-digital-pass...
> P2P payments
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
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.
I think there are solutions to the UPI problem which are not whatever this is. Cash has been a huge pain point in India for a while now.
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.
> it's been an absolute nightmare for a tourist to play along.
But the solution to this should be to simplify the tourist experience and to allow payments from foreign banks and cards. Traveling to China has a huge hassle in the late 2010s due to everyone local switching to WeChat/Alipay but it not being available for tourists, but in the last few years (I last visited in 2023), you could use WeChat/Alipay with a non-China bank card.
> The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%).
Or a credit card.
Don't visit India, problem solved.
UPI is not perfect but me as a white piggu tourist handling monopoly money isn't much better.
> which charge a markup for loading money (3%).
.... the markup being what the credit card companies charge them.
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.
It affects everyone who visits India, so it's not really an edge case. I'm sure there are plenty of towns in India that is primarily tourism-based.
Ok I get that, but 9 million people a year is less than 0.1% of the population. so they wouldn’t even show up in p99 stats.
> 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 of D1/D3/Thao Dien/Da Lat/Da Nang/Hanoi and we resort to her Vietcombank account).
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/Digital and DMart or QuickCommerce platforms like Blinkit 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.
But my SO and I never understood the tay ba lo mindset. Catering to them is what kept Thailand and the Dominican Republic stuck in tourism-induced Dutch disease because it incentivizes extractive and low productivity economic sectors like real estate and low skill services at the expense of human capital development and investing in high productivity industries.
> 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, and this wasn't some plot to extract money from the gora, they genuinely didn't have and couldn't find small bills.
In the end they tried to wave it off and discount my meal by 40 rupees or something, and I rounded up by 60 instead. And I remember thinking I probably just created another problem, because now they need to balance the books and parcel out the cash tip without change.
> 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
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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.
> 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.
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 visit India when you can book an entire floor of the JW Marriott Aerocity in Delhi...
Yearly I spend, on swiggy alone, more lakh than most bengaluru techs get paid.
> 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.
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.
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.
Standard VAT in Poland is 23% so taxes usually dwarf fees.
0.5% gross on a 1% margin business (which is most retail) is egregious.
I would like to know where that 1% retail business is located. My family has a bunch of hardware/electricity retail businesses and the margins are way more than that. Like 30%-500%.
Groceries and fuel come to mind.
You mean subsidized wares that is priced for loss to lure masses to cheap shopping, while selling other stuff above the price? Like buying liquors like rum and whiskey in european supermarkets is almost guaranteed to give cca 2x the price of cheapest online sellers in same country. Thats age old tactic, you need to look at overall sums spent or prices across the offer
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.
Only the interchange is capped. The merchant has to also cover network and processor fees. And then there are some uncapped transaction supposedly so the fee covers this risk. Comes out to 0.6-0.7% for a smaller merchant with the card present.
One person’s insanity is another person’s interesting puzzle and optimization problem.
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.
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.
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.
The government being able to monitor and control how every individual spends money is a double-edged sword though
Right, this has second and third order effects. I am sure this must have been brought up during the discussions and overruled for whatever reason. The bureaucrats and politicos involved are not stupid. But there is some game being played here.
How would a fee preclude tracking sales data and collecting taxes?
Small merchant will stop taking UPI
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.
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.
Aren't debit transactions capped at 0.2% in the EU and credit 0.3%?
No, those are caps on the interchange fees paid to the issuing bank. Card transactions have other fees as well.
That is true yes. The interchange fees tend to be the largest component though. The ECB reports that the average transaction cost of debit is 0.44% [1]
[1]: https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse...
in the EU, yes, but not in India with UPI ;-)
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.
Visa & MasterCards actual take is way lower than that. The fees that merchants see on cards are mostly collected by the banks - "interchange".
> 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.
> 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.
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.
Wexin diaspora ftw
> I have QR enabled payments available across maybe 10 different countries
Any experience or rec's for Thailand?
Unfortunately Moreta disabled Thai PromptPay QR payments recently except for US KYC'd people due to some compliance dispute. There's also lbank.com but I can't confirm if they currently work in Thailand (lbank has an... interesting reputation, I can only use it via TestFlight, but works for my daily food spend needs)
Otherwise you're stuck with AliPay+ merchants (easy via Wise) or TAGTHAi which should still work but is expensive and sucks.
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I forgot about https://p2p.me - they're taking the regulatory arbitrage 'personal travel payment concierge service' approach, basically "work around the problem, not with it" as the founders realized the people making the regulations neither know nor care about on-the-ground practicalities.
This is the reality.
POSIWID. Purpose of system is what it does.
If you're going to post this, please elaborate on it at least a little bit. At least to show whether you actually understand the point of the phrase.
Counterpoint: These are temporary growing pains that will be resolved in 10-ish years.
The Australian experience of allowing a transaction fee is simply that every single transaction adds the maximum amount.
After whatever maybe 15 years that have banned the practice.
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.
This is very surprising because the proposed rates would equal or be higher than regulated interchange for Visa and Mastercard in Europe.
In reality it’s closer to 0.5-1% in Europe since banks apply their own fees on top of the regulated interchange rate.
I thought the regulated interchange rates for Visa and Mastercard in Europe were tiny (compared to the US).
Key Points:
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.
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?
Title is: UPI: India built the world's biggest digital payments miracle. Now comes the bill
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.
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...
Summary reflection:
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 [0]. 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.
Further, add to that the real-world infrastructure and organisational capacity to construct, maintain, secure, transport, and otherwise manage the infrastructure needed to hold and deploy your USD 1Bn in hard cash. This staggeringly capital-intensive exercise is subject to economies of scale.
These facts of life make it that much harder for anybody, especially enemy nation-state actors, to physically perpetuate large-scale money-supply based corruption of the kind being increasingly perpetuated by individual people, in private and public life, because they are able to exercise state-level power over digital economies.
Furthermore, currency notes are ridiculously hard to counterfeit --- AFAIK Indian banknotes (and US ones) are among the most secure (as in transaction-trust-secure) forms of monetary exchange humans have crafted.
Printing and injecting those into an economy at scale, to launch an inflation-attack requires nation-state level capacity at multiple levels, and the geopolitical incentive to do so. And if they do, it does not remain surreptitious for long.
Co-opting money systems, especially crypto-currencies to private ends and/or a offensive economy-destabilising tools, is trivial in comparison. You don't need to launch a 51% attack on the ledger. You just need a big enough psychological spanner, delivered into everyone's infinite brainrot feeds, to make 'em believe in The One True Currency; one that benefits you personally the most, obviously...
Obligatory XKCD: "Security" https://3d.xkcd.com/538/
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[0] More paper-napkin arithmetic: https://www.ehd.org/science_technology_largenumbers.php and https://goodcalculators.com/money-weight-calculator/ etc... (no affiliation to any of them).
(edit: fix typos, add clarifications, maybe I should have made an actual blog post... my publishing workflow isn't indieweb enough yet, sorry :'))
Apparently even BBC reporters now use LLMs to draft their articles.
Totally understandable. No human working at BBC will ever write a neutral or positive story about India
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.
Did we read the same article? This seemed pretty positive about UPI as a whole, while covering the expected drawbacks of adding fees.