Starting June 1, the Aadhaar Enabled Payment System (AePS) has revised its interchange fee (fee paid by the remitter’s bank to the beneficiary’s bank) from 0.5% of the transaction amount (with a maximum cap of ₹15 per transaction) to a flat rate of ₹ 0.25 per transaction. No fees will be charged for transactions under ₹100. What is AePS AePS is a financial inclusion product developed by the National Payments Corporation of India (NPCI) which facilitates cash withdrawal, deposit and funds transfers at MicroATMs (handheld card swiping devices) through a business correspondent (BC - an extended arm of a bank that provides financial services to unbanked/underbanked areas) of any AePS-enabled bank. According to NPCI’s website, 130 banks and five non-banks are a part of this payment system. Why it matters: It is important to note here that this isn’t the first time NPCI has attempted to reduce the interchange fee for AePS. According to a report by Hindu Business Line, in 2018, NPCI (on the recommendation of public banks) had been discussing interchange fees, which received significant pushback from commercial banks such as YES Bank, RBL, IndusInd Bank, and IDFC Bank - who claimed that this would adversely affect the livelihood of BCs. Given the pushback back then, it would be safe to assume that this negative impact on BCs is possible this time as well. According to NPCI’s product booklet on AePS, it is meant to be used by people in remote areas who don’t have access to banks. Since BCs…
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