From Free UPI to Airport Lounge Food: Here’s How Banks and Govt Cover the Costs
UPI: These days, a debate has started on the free facility of UPI. However, this free facility is not new. Someone or the other pays for it, because it costs a lot. In exchange for the free facility, you share data. Ajit Singh's report on this-
UPI is the primary facility for payments, ranging from small daily transactions to large tasks. Your mobile operator, National Payment Corporation of India i.e. NPCI and banks join it. Banks and NPCI have to spend a lot on the technology of UPI. Still UPI is free. On the other hand, banks charge a fee if there is no minimum deposit in the account. In such a situation, the cost of UPI is covered by the government through a subsidy. But in exchange for this, your data reaches those payment companies where you have not shared it.
If you have a credit card, you can eat free food in Adani Lounge at major airports. In some cases, you have to pay one rupee and in other cases, you have to pay nothing. At airports where a cup of tea costs Rs 150-200, getting food for free is a surprising thing. Customers are not paying for the food, yet the lounge access provider is making a good profit.
Airport lounges have become a business model. Banks provide funds for this and passengers take advantage of it. The facilities available in most lounges include buffet food and beverages, WiFi and charging points. Some even have showers, spas and sleeping pods. Then the question is who pays for all this. The answer is that your bank or card network is paying on your behalf.
Whenever you enter the lounge with a card, be it Visa, MasterCard or RuPay card, the bank pays the lounge operator. This is part of your credit card benefits package. The bank pays this in the form of loyalty and acquisition cost.
For domestic lounges, the fee is Rs 600-1,200 per visit and for international lounges, it is $25-30. Whenever you buy something in the lounge, your bank pays the bill. Lounges prefer those passengers who travel a lot. They get paid per visit. Banks earn swipe/merchant fees on high card usage.
Financial advisor Naresh Sehgal says that some lounges work like middlemen. They partner with thousands of lounges and sell access rights to banks. They charge banks in bulk and pay the lounges. Their expenses come from your bank or card network. These are part of your credit card benefits and are already being paid for through annual fees or expenses.
