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By:

Sumit Ranjan Das

21 August 2024 at 4:08:59 pm

UPI Must Stay Free

AI Generated Image Yesterday, I went to my neighbourhood shop to buy aloo chop and vegetable chop to eat with muri. I reached for my phone to pay by UPI, as I do for almost everything. The shopkeeper stopped me. “This is the last time we’ll accept UPI. From tomorrow, CASH ONLY.” I didn’t argue or explain that payments up to Rs. 2,000 remain free. It would have been a waste of breath. So I let it go, but I kept thinking about it on the walk home because I think I know what he was afraid of....

UPI Must Stay Free

AI Generated Image Yesterday, I went to my neighbourhood shop to buy aloo chop and vegetable chop to eat with muri. I reached for my phone to pay by UPI, as I do for almost everything. The shopkeeper stopped me. “This is the last time we’ll accept UPI. From tomorrow, CASH ONLY.” I didn’t argue or explain that payments up to Rs. 2,000 remain free. It would have been a waste of breath. So I let it go, but I kept thinking about it on the walk home because I think I know what he was afraid of. Picture a vegetable vendor with a pushcart at the corner of your lane. Call him Ramesh. He studied up to Class 8. Two years ago, he put a QR code on his cart because someone told him one thing: “Bhaiya, UPI is free. The money comes straight to your bank.” That one sentence did more for Digital India than any seminar. No card machine, no fee, no paperwork. Now tell Ramesh that a Merchant Discount Rate (MDR) may apply to specified transactions above Rs. 2,000, subject to exemptions. He won’t argue. He will put up a board: CASH ONLY. MDR is the fee a merchant pays to accept a digital payment, and UPI has been free for merchants since 2020. The new framework proposes a fee of 0.4 per cent on specified merchant transactions above Rs. 2,000, with a cap of Rs. 300 on transactions above Rs. 75,000. Payments up to Rs. 2,000 remain free. Person-to-person transfers are not covered, and under the announced plan, customers are not charged directly. On a Rs. 10,000 merchant payment, the merchant would pay Rs. 40. Small merchants receiving less than Rs. 1,00,000 a month through UPI were proposed to be exempt. One report adds that the committee was reportedly considering exempting businesses with annual turnover of up to Rs. 40 lakh. On October 13, the National Payments Corporation of India (NPCI) said the fee, due to be implemented on October 15, would be introduced immediately after Diwali, on a date to be notified separately. The decision merley postpones the fee. Consider Ramesh again. Suppose he sells Rs. 5,000 worth of vegetables a day, mostly through payments of Rs. 30 to Rs. 300. That amounts to around Rs. 1,50,000 a month, or roughly Rs. 18 lakh a year. Every one of his payments is below Rs. 2,000, so under the proposal, they remain free. But his monthly receipts exceed Rs. 1 lakh, which means he cannot simply assume that the small-merchant exemption covers him. Who will tell him? Who will explain it in Bengali, Hindi or Maithili, at his cart, in two minutes? A vendor who cannot understand the rules will choose the option that feels safest: cash. Cash is not the enemy. But for a small merchant, it also means hunting for change and losing customers who do not have it, facing the risk of theft, loss and counterfeit notes, spending time counting, storing and depositing money, and having fewer digital records to show a bank when seeking credit. “Free” does not mean UPI costs nothing to run. Security, fraud control, banking systems and customer support all require money. In March 2025, the Union Cabinet approved an incentive of Rs. 1,500 crore for low-value BHIM UPI merchant transactions for the financial year 2024–25. Genuine welfare must never be treated as a piggy bank. Every rupee, whether spent on welfare or infrastructure, should deliver greater value. Five measures would help keep UPI simple. First, person-to-person UPI transfers must remain free. Sending money to family should never come with an unexpected charge. Second, protection for small merchants must be straightforward. Thela-walas, tea stalls and kirana shops need one clear exemption, not five clever ones. Third, UPI must be funded transparently. The government and relevant institutions should publish what it costs to run the system, how much public money supports it, how much any proposed fee collects and what results follow. Fourth, the rules must be explained in local languages. A one-page notice or a short voice message through a payment app would reach Ramesh faster than a 20-page circular. Finally, the impact must be measured before any fee is extended. Changes in small-merchant acceptance and transaction volumes should guide the next step. India did not build UPI by making it clever. It built it by making it simple and free. (The writer is a Cost and Management Accountant and founder of TaxoDas. Views personal.)

AI’s Reality Check

Dec 20, 2025
3 min read

It started with great excitement, the kind we have seen before whenever something new promises to change our lives. In tea shops, offices and online discussions, people spoke in awe about machines that could diagnose diseases, drive cars, analyse mountains of data, create art, write computer code and even talk back like humans. Companies rushed to show their Artificial Intelligence (AI) plans, investors poured in money, and share prices climbed rapidly, almost as if they could only go up.


Wall Street mirrored this optimism. US indices marched upward, powered by heavyweight technology names. Amazon, Microsoft, Nvidia, Meta and Tesla became shorthand for the future itself, while financial giants such as Visa and JP Morgan highlighted how deeply AI was penetrating payments, banking and risk management. The so-called ‘Magnificent Seven’ - Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla command a combined market capitalisation larger than the entire Chinese economy.


Then came the pause, stock prices corrected, funding became cautious. Soon, people started using a familiar word – ‘bubble.’  But before we rush to declare a crash and enjoy saying “we told you so,” it is worth pausing for a calmer look. What we may be seeing is not a collapse, but a sensible pause. In simple terms, it is the market taking a breath, separating big promises from practical progress.


Early euphoria

Every technological shift arrives wearing the borrowed clothes of history. The dot-com boom of the late 1990s promised a new economy and briefly delivered inflated valuations before crashing spectacularly. The housing bubble of the mid-2000s had wrapped excess in the comforting language of bricks and safety, only to expose the dangers of easy money.


Artificial intelligence, however, is a slightly different guest at the party. Unlike many dot.com firms that had websites but no revenues, AI already works. It translates languages, spots tumours, predicts supply chains, flags fraud and writes serviceable emails.


Markets, being emotional creatures, tend to price the distant future into the impatient present. In the last two years, expectations raced ahead of deployment. Every company presentation suddenly included an AI slide, often placed strategically between ‘vision’ and ‘growth.’ Investors rewarded ambition generously.


The recent cooling in US indices has been driven less by disappointment and more by arithmetic. Training large AI models is expensive. Chips are scarce and monetisation takes time. When quarterly numbers from even admired leaders such as Amazon, Microsoft or Tesla did not immediately match long-term storytelling, markets adjusted their spectacles.


This adjustment is being interpreted by some as a bubble deflating. Yet, corrections are the market’s way of asking better questions. Who will pay, how much, and for what exact value? These are not hostile queries. They are relevant ones.


History suggests bubbles burst when the core assumption proves false. The assumption behind AI - that intelligence can be automated in useful ways - has already been demonstrated. The uncertainty lies elsewhere: scale, costs and returns. How widely can AI be deployed? How quickly can expenses fall? Which sectors benefit first, and which resist longest?


The dot.com crash did not kill the internet. It killed weak business models. Amazon survived, pets.com did not. The housing crisis did not end home ownership. It exposed reckless lending. In hindsight, these episodes look less like endings and more like filters.


AI appears to be passing through a similar filter. Capital is becoming selective. Grand claims are being replaced by specific use cases. Instead of “AI will change everything,” the pitch is quietly shifting to “AI will reduce processing time by 25 pc”.


There is also a geographic angle. Much of the AI exuberance was priced in global markets, while adoption is unfolding unevenly. In countries like India, AI is less a luxury toy and more a productivity tool. Banks use it to detect fraud, farmers to forecast weather, startups to scale customer support.


Regulators, meanwhile, have entered the discussion - another sign of maturity. Debates around data use, bias and accountability are gaining momentum. Regulation is often dismissed as a drag on innovation, yet it can function as a steering wheel rather than a brake.


The real irony lies in our impatience. We demand revolutions to justify quarterly earnings and expect general intelligence to arrive by next Tuesday. When that fails to materialise, disappointment sets in. History tells a different story. Every transformative technology -electricity, automobiles, smartphones - passed through phases when investors doubted its economics and timing.


What we are seeing now is not a loud burst but a quiet recalibration. AI is shifting from promise to process.  Labelling this phase an ‘AI bubble’ makes for catchy headlines but ignores nuance.


(The writer is a retired Bengaluru-based banker. Views personal.)


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