Budget 2024: Fintech industry wants digital public infra investments, UPI fees and more

Mumbai: Financial technology companies have a long list of demands and expectations from the upcoming Union Budget, such as investments in digital public infrastructure, GST exemption for business correspondent (BC) outlets, and a fee structure for UPI payments.

“We strongly urge the finance minister to prioritise pivotal solutions such as enhancing digital infrastructure, financial literacy initiatives, and AI-powered credit assessments within financial institutions to improve lending decisions and automate loan processes,” said Ankit Ratan, co-founder & CEO, Signzy, which offers a digital on-boarding solution for banks, non-banking financial companies (NBFCs) and other financial institutions.

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Other suggestions include policies and robust security measures to curb cyber threats and frauds, support for open banking policies, a cloud payments platform for banks, enhanced public-private partnerships, and investments in advanced technologies such as AI and blockchain.

“The Budget can support growth with clearer regulations, tax exemptions, and lower capital costs, boosting profitability. We expect the upcoming Budget to unlock new opportunities, enabling access to financial products through partnerships between large public sector banks and fintechs,” said Bipin Preet Singh, co-founder and CEO at MobiKwik.

Dilip Modi, founder and CEO of Spice Money, called for a GST exemption on services offered through BC outlets to reduce tax burdens and operational costs and make it easier for fintech companies to offer financial services in rural and remote areas.

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The industry is also seeking clarity on new guidelines and lending practices, and measures to support innovation and enhance the digital lending ecosystem—especially MSME lending.

Fees for UPI transactions

A major demand is the introduction of fees for UPI payments in phases to create monetisation opportunities. “The government should look at charging for digital payments like UPI which will allow banks to build robust payment infrastructure and security standards enabling fast, simple and secure payments while protecting consumers from frauds and cybersecurity threats,” said V Balasubramanian, CEO, Financial Software and Systems.

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Others such as Rahul Jain, CFO, NTT DATA Payment Services India, also called for a subsidy on the merchant discount rate (MDR) charged for UPI transactions through credit cards to make the business model more viable. Currently, an MDR of 2% is levied on UPI-linked RuPay credit card transactions. Of this, 1.5% goes to the card issuing bank while the remaining is shared between the card network and the merchant acquiring bank.

“Simplifying and fast-tracking the licensing process, creating a proper mechanism to ensure safety of digital payments, and setting up infrastructure and other targeted initiatives will provide a further boost to digital transactions’ scale and volumes,” Jain said.

Gaurav Jalan, founder and CEO, mPokket, was optimistic that the government would continue to see the fintech industry as a key driver of easy access to credit and a job creator. “We therefore expect a favourable approach to investments in the sector and clarity on the open regulatory discussions,” he said.