India's banks are making $64B from free cashless payments | Hacker News Reader

India's banks are making $64B from free cashless payments

bloomberg.com

The way I understand the article, the banks ain't making $64B from free cashless payments but from other services like non-free cashless payments, loans etc.

Correct. The free payments are a utility offering as part of UPI, banks get to upsell other services.

https://en.wikipedia.org/wiki/Unified_Payments_Interface

https://news.ycombinator.com/item?id=37367855 ("UPI Payments: 10B transactions a month done, next stop 100B")

https://news.ycombinator.com/item?id=37368398 (Related dang macro expansion from id=37367855)

https://news.ycombinator.com/item?id=37368202 (>50% monthly global Visa transactions)

From what I got from the article the McKinsey survey, this is the actual revenues from transactions fees including but not limited to UPI. Not the adjacent revenues.

> Even with a free public utility, India’s payment revenue swelled last year to $64 billion, behind only China, the U.S. and Brazil, and rivalling Japan, according to McKinsey & Co.’s latest global survey[0].

[0] https://www.mckinsey.com/industries/financial-services/our-i...

The article is poorly written to support a clickbait headline. I found it hard to follow.

> Since April, customers dipping into their mobile-phone wallets to settle bills of more than 2,000 rupees ($24) have to bear a maximum 1.1% fee, but only if they are scanning a different platform’s quick-response code.

I don't understand why an instantly-settled debit transaction required a percentage based fee, rather than a flat one.

Isn't this like an instant wire transaction which are typically flat fee? Do payment processors have to reverse transactions due to fraud?

> I don't understand why an instantly-settled debit transaction required a percentage based fee, rather than a flat one.

Because they can. Because banks, utilities, insurance companies, etc. all sell products that you in one way or another are required to buy, and as such, they can set the terms of that exchange knowing damn well you'll pay the vast majority of the time.

>Banks do try to impose some costs on high-volume users, and the government gives them money to promote low-value online transactions and make formal credit available to disadvantaged groups like street vendors.

A loss leader for their attempt to completely centralize, monitor, control, and rent back all forms of value exchange between humans. I feel for the Indian people suffering from their government's war on cash.

Huh ?

UPI (the payment system) is loved in India, that along with other systems.

Have significantly reduced corruption in getting the rural farmers and people in need, access to funds that government allocates to them.

Previously it would get stolen by middleman or corrupt politicians, leaving only 10% or sometimes 0% of the original amount meant for them.

Now with this system and their introduced zero balance accounts for all, cash gets distributed directly to their biometrically linked accounts.

Not everyone are programmers who only care about freedom from misuse of tech, and liberal cash use.

These are millions of people being helped by a system where cash was used to fraudulently steal the funds that was rightly meant for them.

Its one of the most praised improvements done by government of India in years. Most people here will have something to complain about the government, but almost all of them, agree that this has made people’s lives better.

These are instruments after all, it is people who do bad things, they do bad things with cash, and when you replace it with centralized digital money, they’ll do bad things with that too.

Nothing different, except now its more advantageous (atleast for the time being).

Jan Dhan has absolutely nothing to do with UPI.

That's great. I'm glad the loans are working better. But that's just being done as bait for the trap that is the cashless transactions.

Honestly, why should I care if the government has access to my transaction history? The government hasn't eliminated cash as an alternative, it still exists and has to be mandatorily accepted as payment (unlike in some parts of Europe and USA). What UPI has done is allowing the most disadvantaged people to take part in the value exchange process too.

I recently used UPI to pay a street vendor, but without it, I would have been stuck with high denomination notes (because foreign currency converts exponentially against INR), hunting for a place to exchange it for lower denominations. Instead the street vendor got my business.

For the stuff that I would really like to hide from the government (not that it matters as an non-resident), I wouldn't be using UPI - that's just stupid and the equivalent of leaking classified documents on War Thunder or something. Most people engaging in that would simply call their banker in Dubai or Singapore, who'll readily arrange whatever shady transaction they would like, through perfectly legal and convoluted routes.

If you may, can you tell how did you set-up UPI as a foreigner since it requires a bank account AFAIK

I'm an NRI (a non-resident Indian) and an Indian citizen. I can open an NRI type account with my bank, although even Persons of Indian Origin (PIOs), Overseas Citizens of India (OCI) cardholders and resident foreign citizens in India can open bank accounts, the former also being able to open NRI accounts in spite of not being citizens.

AFAIK, the people facing issues opening a bank account are only tourists, and opening a bank account is relatively easy compared to most countries.

As for actually using UPI, the government recently allowed some foreign numbers to be registered with the UPI authority, so all bank accounts with those countries' foreign numbers such as NRI accounts can be used within the UPI system. Those countries include Canada, USA, UK, UAE, Qatar, Saudi Arabia, Oman, Singapore and Australia iirc. So I'm certain that they'll extend it to more countries soon.

It's common to portray government mass surveillance as only dangerous to people who are commiting crimes. That could not be further from the truth. As you say, criminals will already have means to avoid the surveillance. Whereas ordinary people will have their every transaction logged. Then leaked. Then used against them by corrupt local officials and criminals who get access to the information. And that's not even getting into the risks from government policy changes making formerly legal behavior illegal (like, say, abortion in the USA).

The govt’s war on cash (not really a war on cash but ugly attempts to starve the opposition of cash before every election) is completely separate from the digital services, which are far superior to that offered in t most other places, and is networked like the internet, as opposed to the silo’ed systems in much of the rest of the world which are more akin to the AOL model of every private provider having it’s own closed system.

Non-paywalled article: https://archive.ph/JHIyh

First CityWide Change Bank 1 - Saturday Night Live:

https://www.youtube.com/watch?v=CXDxNCzUspM

First CityWide Change Bank 2 - Saturday Night Live:

https://www.youtube.com/watch?v=KodqIPMbyUg

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