I really hope cash transactions become a little more normalised in India.
The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%). But let's say you accept that as a part of travelling - the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country.
Alternative, since no one accepts cash anymore, is that I have to carry thick wads of cash so I can hand out exact change. That still gets you the stink eye because most vendors don't like to deal with cash anymore.
> the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country
Same issue in a lot of Southeast Asia. After jumping through all hoops to get the correct app, id verified and paying a hefty fee, it was still a gamble if the restaurants would have a business QR code or a personal one.
One time in Laos I was on an island that didn't have an ATM, almost no cards were accepted and I had run out of local currency. So I ended up asking for the QR code before ordering at the restaurant to make sure it would work out.
In India it's super annoying when taking autos because the drivers won't have change and in 99% of the cases they have a personal code. So I just ended up using Uber with credit card, much less hassle.
I don't know, central banks seem super afraid of money laundering somehow. But just allow me to spend $100 or what, I just want to buy a quick coffee or a fruit from a street vendor, not a Rolex.
Some P2P is between family/friends. Or you are paying rent etc. But a lot of it is business transactions that move funds from one savings account to another because the auto driver is accepting a payment in his mother's or wife's account or something similar. There is so much friction in the banking system if you have to create a current account that this is pretty common.
The system needs to improve drastically to support the two sides instead of letting it be. Should help your use case as well if that happens
I mean this sounds like an edgecase, which is good tradeoff for the ~billion of people who this system is designed for.
Essentially UPI was there to stop the industrial fraud and money laundering that was going on india. I have not actually checked the efficacy of this though. The last time I checked was when modi made the largest bank note not legal tender.
That part aside it does sounds like VAT (a 20% sales tax on all purchases) but for transactions.
> it's been an absolute nightmare for a tourist to play along.
But the solution to this should be to simplify the tourist experience and to allow payments from foreign banks and cards. Traveling to China has a huge hassle in the late 2010s due to everyone local switching to WeChat/Alipay but it not being available for tourists, but in the last few years (I last visited in 2023), you could use WeChat/Alipay with a non-China bank card.
> it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps
An NRI account with PhonePe is good enough as someone with OCI, but even in my ancestral town and village Visa and AmEx adoption by payment processors has been high despite no real diaspora or tourism.
And there's no real point in optimizing for the kind of tourist who's going to go visit a slum like Paharganj or go to Kasol to partake in drugs.
That said, I guess it also depends on where an NRI or PIO is from as some states have better payment processor penetration than others.
But tbf, when my SO and I go to VN to visit family, it's the same story there (Momo/Zalo and cash rule Vietnam outside the tourist bubble).
India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on.
A $1B subsidy to eliminate friction on the payment front is peanuts.
One of the reasons why the fee is being considered is under the pressure of other payment providers who are loosing to UPI in Indian market. Its been believed to be one of the negotiation points by the US-India trade deals
Same reason the US is going after Pix in Brazil. The world is decoupling from the US and the US is going to try to flex against it as it continues. Dollar dominance and the “exorbitant privilege” continue to erode (with the acceleration self inflicted). Also shrinks the TAM of these private US firms to only the US versus the world.
It goes both ways: What if the ONLY payment method was the one approved by your "elected" government. A balance where they can all exist is the best, and most difficult decision.
Currency is already managed by the elected government, and every democracy in the world traces electronic transactions. Some (like Italy) forbid cash payments in large sums altogether. So what's the boogieman here?
The boogyman is just what you described, and every democracy in the world absolutely does not trace electronic transactions.
Some have a more hands off approach, including size of transactions and flagged behaviour as indicators of when payment processors must report to the government.
The Goverment should absolutely have no idea who spends what, where. Warrants and court orders, check values should be required before anyone can know. The potential to suppress political opponents, to squelch legitimate protest, to interfere with elections, is too dangerous.
Simply because some countries, like the US after 9/11, decided to give up this aspect of a free people, does not make it right.
Payment rails are a natural monopoly so yeah I’m good with the gov owning it and as the article says, everyone is free to compete with the services they offer.
> What if the ONLY payment method was the one approved by your "elected" government.
Yeah, what if?
You didn't provide any argument, didn't point to any real problem. You just hinted at a "terrible bad thing". Would we have monsters under our beds or bad guys in corners to ambush us?
This sounds like VISA/Mastercad/Apple Pay playing FUD[1].
You realize you're arguing for a monopoly, right? One where competition is not only non-existent but also illegal, and which has complete control over how you're allowed to spend your money.
I think arguing "but it's a democratic monopoly" is little comfort in this situation. Maybe you trust your government not to ever be incompetent or to use the powers granted by this monopoly in a way you disapprove of. Maybe in the short term you'd even be right to do so. But I think history has proven that over the long term that's a very foolish assumption to make.
Completely agree - not every public service has to be treated like a commercial business. Treat the payment backbone as a public infrastructure. We pushed banks to open branches in rural areas in India even if it was not "profitable" for them. Today, even Post Offices offer bank accounts in India. And while the BBC article pushes the propaganda that this will be a charge levied on big businesses, we know the reality is that it will be passed on to us consumers and our burden to bear.
And note that this is not being done to serve India's public interest, but under pressure from Trump - The hidden Trump factor in India’s proposed new UPI transaction levy - https://indianexpress.com/article/explained/explained-econom... . India's Prime Minister Modi is happy to do it though, because like his US counterpart, he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich. Just like Trump's tariff "refunds" increased prices and leeched of billions from American citizens to the corporates, charges on UPI transactions can potentially do the same in India.
> Treat the payment backbone as a public infrastructure.
Yeah. Let banks fund this out of the 2% of NP they must use for CSR activities if they have to.
> he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich
I do not see this. In fact, he is TOO socialist. He was elected on the platform (one of them at least) of "minimum government, maximum governance" and has actually continued to expand the reach of government. The bureaucracy has not been tamed. The government continues to run businesses. Build a sovereign wealth/investment fund like Singapore if you want a share of the growth in the economy instead of running loss-making businesses for decades.
And all the centralization of decision-making. He is more of Nehru/Indira than he thinks he is.
UPI payment has enabled tracking actual sales data and helped with tax collection. This is an intangible benefit which is likely to go away with the introduction of the fee.
Right, this has second and third order effects. I am sure this must have been brought up during the discussions and overruled for whatever reason. The bureaucrats and politicos involved are not stupid. But there is some game being played here.
Isn't 0.5% very competitive and basically nothing compared to taxes on the transaction?
Here in Poland we have a budding "save cash" movement. And they make some good points about freedom and privacy but are the loudest about the processing fees when mostly it's a way for smaller merchants to avoid paying taxes. Which is fine, I think they should be exempted anyway, but let's not pretend that it's the 0.5% in fees rather than the 30% in taxes.
The difference is that 0.5% on the whole payment, might in some cases be actually much more than taxes on the profit.
Or even worse, if you sell for whatever reason without profit, the tansaction fee is your loss.
In Poland fees are capped at 0.3% for credit card, 0.2% for debit per EU. Which is why generally in the EU you don't have the insanity with credit card loyalty programs.
Only the interchange is capped. The merchant has to also cover network and processor fees. And then there are some uncapped transaction supposedly so the fee covers this risk. Comes out to 0.6-0.7% for a smaller merchant with the card present.
0.3-0.5% is still nowhere near the rates of visa and mastercard. Does UPI offer the same level of fraud protections or is it a free for all like Zelle is here in the states? Especially if they limit to > 2000 rupees.
Hopefully they allow foreigners some track to access UPI in the future.
> the system is now available in some form for payments in 11 countries outside India.
I see this often cited, but in reality it's a farce. "UPI is international" the staunch defender says, so I rebut "Yes, in one place at the Eiffel Tower... everywhere else? The French have no idea what UPI is, and your bank will charge you stupid FX fees for card payments".
Meanwhile if I'm in India, people look at me weirdly for paying with UPI yet most won't take card payments outside of tourist areas or it will get declined because foreign cards are blocked - and if you try to pay cash suddenly nobody has any change, will refuse to take the 20 rupee note they gave you yesterday, or have concerns about whether the notes you literally just withdrew from an ATM are legitimate - meaning you can end up with notes that are defacto unspendable despite being perfectly legal tender and in acceptable condition.
And as a tourist... you want UPI? There are a few ways but they're byzantine, apps locked to the Indian App Store (for tourists?), in-person KYC upon landing, very low first-payment limit, topup/signup and idle fees that push the net fee % easily into the 5-10% range.
Lets look at a perfect example... you pre-KYC on an app ahead of your trip on the one app that allows remote KYC, but you can't load money onto - first you must provide your visa, but the eVisa doesn't count they want the actual visa stamped in your passport. You land, immediately after customs you submit the picture of your visa stamp and wait an indeterminate amount of time, it could be 8 hours, or 24 or 48 or it could get rejected and you could be required to do in-person KYC (either you go to them, or they come to you within a ~5hr window... but only in the major cities).
So day 1 it's impossible to use UPI. It gets approved on day 2, you take a taxi somewhere maybe a nice restaurant, your UPI is now loaded with INR and you try to pay the driver... Your driver has a personal UPI account, you can't pay him! You only have cash... Large denomination INR notes because that's what the ATM provides, he doesn't take card and refused to admit he has change. You eat the already inflated cost and swear to only use app-based services (assuming the Taxi Mafia hasn't had them banned in your city).
You get to the resto and enjoy a meal with your friends, it's a nice place and somewhat expensive, you come to pay, the bill is reasonable and you think "I will pay with UPI", you try paying, it's a business account so should be OK! NO.... You have exceeded your first-day limit! Waiter tells you there is no card machine, and they have no change for cash...
Eventually you leave India, there's a non-trivial amount left in your tourist UPI account, you look for somewhere to withdraw it back to your card - no physical counters open at the airport, you request a withdrawal via the app... it never comes, the next month you get hit with a 500 INR inactivity fee, your visa expires and the app shuts down, next month 500 INR inactivity fee - can't make support requests through the app any more because your visa is no longer valid... Your balance slowly goes to 0 because you didn't think to spend every last rupee on your way out so it gets eaten by the system.
I say a small sub-1% fee on UPI is fine, it's great infrastructure when it works, but more needs to be done with global UPI integration. I have QR enabled payments available across maybe 10 different countries and India sticks out as being the one that's consistently an absolute pain and actively works against you.
Unfortunately Moreta disabled Thai PromptPay QR payments recently except for US KYC'd people due to some compliance dispute. There's also lbank.com but I can't confirm if they currently work in Thailand (lbank has an... interesting reputation, I can only use it via TestFlight, but works for my daily food spend needs)
Otherwise you're stuck with AliPay+ merchants (easy via Wise) or TAGTHAi which should still work.
The UPI experience is built for a single audience in mind. It has changed the way people transact in India but at the same time it's been an absolute nightmare for a tourist to play along. The only route for a tourist to use UPI is via third party apps, which charge a markup for loading money (3%). But let's say you accept that as a part of travelling - the limitation of tourist wallets is that they can't be utilised for P2P payments - exactly what UPI is most used for across the country.
Alternative, since no one accepts cash anymore, is that I have to carry thick wads of cash so I can hand out exact change. That still gets you the stink eye because most vendors don't like to deal with cash anymore.
Same issue in a lot of Southeast Asia. After jumping through all hoops to get the correct app, id verified and paying a hefty fee, it was still a gamble if the restaurants would have a business QR code or a personal one.
One time in Laos I was on an island that didn't have an ATM, almost no cards were accepted and I had run out of local currency. So I ended up asking for the QR code before ordering at the restaurant to make sure it would work out.
In India it's super annoying when taking autos because the drivers won't have change and in 99% of the cases they have a personal code. So I just ended up using Uber with credit card, much less hassle.
I don't know, central banks seem super afraid of money laundering somehow. But just allow me to spend $100 or what, I just want to buy a quick coffee or a fruit from a street vendor, not a Rolex.
Some P2P is between family/friends. Or you are paying rent etc. But a lot of it is business transactions that move funds from one savings account to another because the auto driver is accepting a payment in his mother's or wife's account or something similar. There is so much friction in the banking system if you have to create a current account that this is pretty common.
The system needs to improve drastically to support the two sides instead of letting it be. Should help your use case as well if that happens
Essentially UPI was there to stop the industrial fraud and money laundering that was going on india. I have not actually checked the efficacy of this though. The last time I checked was when modi made the largest bank note not legal tender.
That part aside it does sounds like VAT (a 20% sales tax on all purchases) but for transactions.
But the solution to this should be to simplify the tourist experience and to allow payments from foreign banks and cards. Traveling to China has a huge hassle in the late 2010s due to everyone local switching to WeChat/Alipay but it not being available for tourists, but in the last few years (I last visited in 2023), you could use WeChat/Alipay with a non-China bank card.
An NRI account with PhonePe is good enough as someone with OCI, but even in my ancestral town and village Visa and AmEx adoption by payment processors has been high despite no real diaspora or tourism.
And there's no real point in optimizing for the kind of tourist who's going to go visit a slum like Paharganj or go to Kasol to partake in drugs.
That said, I guess it also depends on where an NRI or PIO is from as some states have better payment processor penetration than others.
But tbf, when my SO and I go to VN to visit family, it's the same story there (Momo/Zalo and cash rule Vietnam outside the tourist bubble).
India is forced to subsidize farmers to the tune of $37B JUST for urea. Governments routinely offer free bus services to women, free cash handouts to women, free electricity to farmers (who then use the power to pump out groundwater and grow paddy in areas otherwise not suitable for it). The list goes on.
A $1B subsidy to eliminate friction on the payment front is peanuts.
https://en.wikipedia.org/wiki/Exorbitant_privilege
https://news.ycombinator.com/item?id=48994782
https://news.ycombinator.com/item?id=48415854
I don’t want international private companies controlling payments, better have my own elected government manage it.
Some have a more hands off approach, including size of transactions and flagged behaviour as indicators of when payment processors must report to the government.
The Goverment should absolutely have no idea who spends what, where. Warrants and court orders, check values should be required before anyone can know. The potential to suppress political opponents, to squelch legitimate protest, to interfere with elections, is too dangerous.
Simply because some countries, like the US after 9/11, decided to give up this aspect of a free people, does not make it right.
Direct government services typically have a universal mandate. The government won't be able to stop doing business with you.
Yeah, what if?
You didn't provide any argument, didn't point to any real problem. You just hinted at a "terrible bad thing". Would we have monsters under our beds or bad guys in corners to ambush us?
This sounds like VISA/Mastercad/Apple Pay playing FUD[1].
[1] https://en.wikipedia.org/wiki/Fear,_uncertainty,_and_doubt
I think arguing "but it's a democratic monopoly" is little comfort in this situation. Maybe you trust your government not to ever be incompetent or to use the powers granted by this monopoly in a way you disapprove of. Maybe in the short term you'd even be right to do so. But I think history has proven that over the long term that's a very foolish assumption to make.
And note that this is not being done to serve India's public interest, but under pressure from Trump - The hidden Trump factor in India’s proposed new UPI transaction levy - https://indianexpress.com/article/explained/explained-econom... . India's Prime Minister Modi is happy to do it though, because like his US counterpart, he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich. Just like Trump's tariff "refunds" increased prices and leeched of billions from American citizens to the corporates, charges on UPI transactions can potentially do the same in India.
Yeah. Let banks fund this out of the 2% of NP they must use for CSR activities if they have to.
> he too subscribes to the anarcho-right political ideology of transferring wealth from the poor and the middle-class to the rich
I do not see this. In fact, he is TOO socialist. He was elected on the platform (one of them at least) of "minimum government, maximum governance" and has actually continued to expand the reach of government. The bureaucracy has not been tamed. The government continues to run businesses. Build a sovereign wealth/investment fund like Singapore if you want a share of the growth in the economy instead of running loss-making businesses for decades.
And all the centralization of decision-making. He is more of Nehru/Indira than he thinks he is.
edit: replied to comment was rephrased during reply.
Here in Poland we have a budding "save cash" movement. And they make some good points about freedom and privacy but are the loudest about the processing fees when mostly it's a way for smaller merchants to avoid paying taxes. Which is fine, I think they should be exempted anyway, but let's not pretend that it's the 0.5% in fees rather than the 30% in taxes.
Hopefully they allow foreigners some track to access UPI in the future.
https://havemony.com
Not cheap and only to business QR codes (so proper shops which probably will take credit card anyway), but it works.
I see this often cited, but in reality it's a farce. "UPI is international" the staunch defender says, so I rebut "Yes, in one place at the Eiffel Tower... everywhere else? The French have no idea what UPI is, and your bank will charge you stupid FX fees for card payments".
Meanwhile if I'm in India, people look at me weirdly for paying with UPI yet most won't take card payments outside of tourist areas or it will get declined because foreign cards are blocked - and if you try to pay cash suddenly nobody has any change, will refuse to take the 20 rupee note they gave you yesterday, or have concerns about whether the notes you literally just withdrew from an ATM are legitimate - meaning you can end up with notes that are defacto unspendable despite being perfectly legal tender and in acceptable condition.
And as a tourist... you want UPI? There are a few ways but they're byzantine, apps locked to the Indian App Store (for tourists?), in-person KYC upon landing, very low first-payment limit, topup/signup and idle fees that push the net fee % easily into the 5-10% range.
Lets look at a perfect example... you pre-KYC on an app ahead of your trip on the one app that allows remote KYC, but you can't load money onto - first you must provide your visa, but the eVisa doesn't count they want the actual visa stamped in your passport. You land, immediately after customs you submit the picture of your visa stamp and wait an indeterminate amount of time, it could be 8 hours, or 24 or 48 or it could get rejected and you could be required to do in-person KYC (either you go to them, or they come to you within a ~5hr window... but only in the major cities).
So day 1 it's impossible to use UPI. It gets approved on day 2, you take a taxi somewhere maybe a nice restaurant, your UPI is now loaded with INR and you try to pay the driver... Your driver has a personal UPI account, you can't pay him! You only have cash... Large denomination INR notes because that's what the ATM provides, he doesn't take card and refused to admit he has change. You eat the already inflated cost and swear to only use app-based services (assuming the Taxi Mafia hasn't had them banned in your city).
You get to the resto and enjoy a meal with your friends, it's a nice place and somewhat expensive, you come to pay, the bill is reasonable and you think "I will pay with UPI", you try paying, it's a business account so should be OK! NO.... You have exceeded your first-day limit! Waiter tells you there is no card machine, and they have no change for cash...
Eventually you leave India, there's a non-trivial amount left in your tourist UPI account, you look for somewhere to withdraw it back to your card - no physical counters open at the airport, you request a withdrawal via the app... it never comes, the next month you get hit with a 500 INR inactivity fee, your visa expires and the app shuts down, next month 500 INR inactivity fee - can't make support requests through the app any more because your visa is no longer valid... Your balance slowly goes to 0 because you didn't think to spend every last rupee on your way out so it gets eaten by the system.
I say a small sub-1% fee on UPI is fine, it's great infrastructure when it works, but more needs to be done with global UPI integration. I have QR enabled payments available across maybe 10 different countries and India sticks out as being the one that's consistently an absolute pain and actively works against you.
Any experience or rec's for Thailand?
Otherwise you're stuck with AliPay+ merchants (easy via Wise) or TAGTHAi which should still work.
After whatever maybe 15 years that have banned the practice.