REGULATION AND SUPERVISION BY THE RESERVE BANKCentral

Section 10A of The Payment and Settlement Systems Act, 2007

Bank, etc., not to impose charge for using electronic modes of payment.

1[10A. Bank, etc., not to impose charge for using electronic modes of payment.--Notwithstanding anything contained in this Act, no bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961 (43 of 1961).]

Summary

Banks and payment system providers are prohibited from charging fees for certain electronic payments.
This rule applies regardless of any other conflicting parts of the Act.
The ban on charges covers both the person sending the money and the person receiving it.
This applies to specific electronic payment modes that are listed under Section 269SU of the Income-tax Act, 1961.
Charges cannot be imposed "directly or indirectly," meaning hidden fees are also banned.

Practical examples

1Mr. Sharma uses a specific government-approved QR code to pay 500 rupees at a grocery store. The bank is not allowed to deduct a 2 rupee "service fee" from his account for this transaction.

2A small business owner receives a payment through a mandated electronic mode. The payment system provider cannot take a small percentage as a "processing fee" from the amount the owner receives.

FAQ

1. Can my bank charge me a small fee for using a digital payment app?

If the payment mode is one prescribed under Section 269SU of the Income-tax Act, 1961, the bank is not allowed to charge you any fee.

2. Does this rule apply to the shopkeeper receiving the money too?

Yes, the law says no charge can be imposed on either the person making the payment or the person receiving it.

3. What if the bank calls it a "technology fee" instead of a "payment fee"?

The law bans charges "directly or indirectly," so changing the name of the fee does not make it legal.

Test yourself

1.Under Section 10A of The Payment and Settlement Systems Act, 2007, who is forbidden from imposing charges for using certain electronic payment modes?

2.Section 10A of The Payment and Settlement Systems Act, 2007, refers to electronic payment modes prescribed under which other law?

3.According to Section 10A of The Payment and Settlement Systems Act, 2007, which types of charges are banned?

4.Under Section 10A of The Payment and Settlement Systems Act, 2007, who is protected from being charged fees?

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