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21 August 2024 at 10:20:16 am

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term...

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term sustainability. The world’s largest real-time payments system, which processed 2,366 crore transactions worth Rs. 29.9 lakh crore in July alone, cannot indefinitely depend on subsidies as transaction volumes, cybersecurity requirements and infrastructure costs rise. A nominal Merchant Discount Rate on larger merchant transactions, it says, would help create a more sustainable ecosystem without burdening ordinary users. That argument has merit. But so does the concern that a payment system which became a national habit precisely because it was cheap and frictionless should not slowly acquire a price tag. Once the legal machinery for charging exists, there is no guarantee that the boundary between large merchants and small ones, or between merchants and consumers, will remain permanently fixed. The Finance Minister has clarified that any Merchant Discount Rate will apply only to a limited set of merchant transactions above a threshold and will be nominal, well below card-payment rates. The details will eventually be decided by the UPI and Services Steering Committee headed by the National Payments Corporation of India. In other words, there is no charge on the table for the ordinary UPI user today. But there is now a legal mechanism for charges to be introduced tomorrow. That is precisely why any alarm, though exaggerated, cannot simply be dismissed. The government, through its clarification, has reassured that UPI’s free-to-consumer model remains intact. The important issue is whether its financing model can evolve without undermining the habits that made it revolutionary. UPI succeeded partly because it made digital payments cheaper and simpler than alternatives. There is also a larger principle at stake. UPI is not merely another commercial payments platform. It is the product of public investment, regulatory architecture and private innovation. The state should therefore be wary of treating its sustainability as an ordinary market problem. The sensible answer lies between free-for-all subsidies and indiscriminate fees: transparent thresholds, genuinely low MDRs, strong protection for small merchants and an absolute firewall around ordinary consumers. The government should publish the economic case for any future charge, including its effect on merchants and consumers. UPI was built on trust as much as technology. The government is right to protect its remarkable achievement. It should remember that keeping UPI free is not merely a political promise. It is part of the product.

The Patience Behind A Delicious Dish

If you have ever prepared a really good Indian meal, you know the secret: follow the recipe, choose the right ingredients, respect the process, and give it time.


The instructions are there for a reason - the dough needs to rest, the dal needs to simmer, and the biryani needs its full time on the dum. The care you take shows up in the taste. Investing works the same way.


Your Financial Goals Are the Dish

Your financial goals are the dishes you ultimately wish to relish. First, you decide what you are cooking - your end goal, whether it is retirement, your children’s higher education, or buying a bigger house.


Then, you gather the right ingredients - choosing equity, debt, gold, and other investments in the right proportions. You follow the recipe - investing systematically, diversifying, and rebalancing when needed. Finally, you let it cook patiently, because the real magic happens when you give it time.


Do Not Open the Cooker Too Soon

Too often, however, investors forget this. Impatience creeps in. The stock market moves a little, and they feel like reacting. A festival or wedding comes up, and they are tempted to sell their stocks or redeem their mutual funds. Many start treating their investments like an ATM, withdrawing whenever they feel the urge.


Just like opening the pressure cooker too soon, the result is undercooked - and disappointing.


Compounding Needs Time to Work

We all know about the power of compounding - earning returns on returns. But compounding, like the flavours in a slow-cooked dal makhani, needs time to come together.


Every premature withdrawal interrupts the process. These small interruptions can cost you lakhs, and sometimes even crores, over the long term.


Wealth Takes Years to Build, Minutes to Spend

There is another important lesson hidden in cooking. A dish may take a long time to prepare but only a few minutes to finish. Sheera may take forty minutes to cook, but it can be eaten in ten minutes.


Wealth works the same way. It may take years of disciplined saving, investing, and compounding to build a corpus worth crores, but that money can be spent in a matter of days.


Creating wealth requires patience and consistency; preserving it requires equal care. Therefore, every withdrawal should be made thoughtfully, keeping in mind the years of effort that went into building that money.


Focus on Asset Allocation

This does not mean you should never use your money.


You should maintain a separate emergency fund - a buffer for unexpected needs. Your short-term goals should also be invested appropriately through the right asset allocation. That way, you do not have to touch your long-term investments before they are ready.


Let the Recipe Work

The next time you feel tempted to take a bite out of your investments midway, ask yourself: would you rush a gulab jamun out of the sugar syrup before it has soaked properly?


Probably not. You would wait, because you know the best taste comes to those who wait. So, stay the course. Let the recipe work.


The reward will be worth it - and you will be glad you waited. After all, good things - and great wealth - take time to cook.


(The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)

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