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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.)

Climate of Division

Jan 23, 2025
3 min read

Updated: Jan 27, 2025

America’s second withdrawal from the Paris Agreement marks a seismic shift in global climate diplomacy.

Donald Trump

For the second time in less than a decade, the United States has withdrawn from the Paris climate accord, the landmark 2015 international treaty aimed at combating global warming. President Donald Trump, fresh into his second term, signed an executive order to exit the agreement, characterizing it as an “unfair, one-sided rip-off.” The move, announced with great fanfare at a rally in Washington, underscores his administration’s unwavering scepticism toward climate science and its prioritization of domestic fossil fuel production.


This decision leaves the United States among a dubious quartet of nations—alongside Iran, Libya, and Yemen—standing outside the global pact. It also delivers a significant blow to international efforts to limit the planet’s temperature rise to 1.5°C above pre-industrial levels, a critical threshold for avoiding the worst impacts of climate change, according to the Intergovernmental Panel on Climate Change (IPCC).


The Paris Agreement was a hard-won achievement in 2015, signed by 196 parties after years of negotiations. Nations were asked to set voluntary emissions-reduction targets and submit plans for achieving them, with progress reviewed every five years. Wealthier countries also pledged financial support for developing nations to adapt to climate change and transition to clean energy.


The United States, under President Barack Obama, played a pivotal role in shaping the accord and committed to reducing emissions by 26-28 percent below 2005 levels by 2025. But the path to fulfilling those promises has been anything but smooth. Trump first announced the U.S. withdrawal in 2017, claiming the agreement undermined American sovereignty and disadvantaged domestic industries. Although his administration formally exited in 2020, the Biden presidency reversed course in 2021, rejoining the accord and setting more ambitious climate targets.


Trump’s latest decision not only reverses those gains but also accelerates the timeline. By declaring the withdrawal effective immediately—sidestepping the standard one-year notice period—the United States has left its global partners scrambling to recalibrate.


As the world’s second-largest emitter of greenhouse gases, contributing 15 percent of global emissions, the U.S. plays an outsized role in global warming. Its participation in the Paris Agreement is not just symbolic but essential for achieving global climate goals. The country’s previous commitments under Biden—to halve emissions by 2035 and reach net-zero by 2050—set a high bar for international cooperation and spurred investments in renewable energy worldwide.


The abrupt withdrawal jeopardizes these gains. Without U.S. leadership, the momentum toward clean energy could slow, as could the flow of climate finance to developing nations. The United States had pledged $3 billion to the Green Climate Fund but delivered only $1 billion, leaving a gaping shortfall for nations most vulnerable to rising sea levels, extreme weather, and other climate-related crises.


Trump’s rhetoric, dismissing climate change as a “hoax,” aligns with his broader push to deregulate the oil and gas industry.


Global investments in renewable energy have surged since the Paris Agreement’s adoption, driven in part by the accord’s long-term vision. Wind and solar energy capacity has nearly doubled, and clean energy technologies have outpaced fossil fuels in growth. The U.S.’s withdrawal risks derailing this progress, particularly if it emboldens other major emitters like China or India to scale back their commitments.


The Paris Agreement is far from perfect. Its non-binding nature and reliance on voluntary targets leave it vulnerable to political winds. Yet, it represents the most comprehensive global effort to address climate change, fostering collaboration and innovation across borders.


Trump’s withdrawal leaves a vacuum that other nations, particularly China, may seek to fill. While China has made strides in renewable energy, its growing emissions underscore the challenge of achieving global decarbonization without American participation.


The resilience of the Paris Agreement will be tested in the coming years. As the U.S. retreats into isolationism, the question looms whether can the rest of the world carry the burden of climate leadership alone?


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