Visa, Mastercard, and Paypal offer more than transactions though; they have "buyer protection", "seller protection", etc.
In theory, all you need is institutional trust and KYC, but as soon as you hit a situation like, "oh shit, someone stole my wallet (/ online identity)", you realize why the fees are there.
There are a lot of transactions that don't need that protection, and it's crazy to have to pay for it on those transactions too. You want to by a 5c emoji for use on a social network? You can't, the minimum transaction fee is 30c. Who's going to issue a chargeback on a 5c emoji? And batching is a non-solution.
Right. UPI appears to be a payment system only. Not a sales transaction system. When you buy something with a credit card, there is evidence of a transaction in both directions - you buy some thing from a seller. That allows disputes, dispute resolution, and reversal.
A one-way payment system, such as Venmo, lacks that. (Venmo is trying to retrofit a dispute mechanism, for which they charge 3% extra.) What's Google proposing? Probably something with terms that include "sole discretion" (theirs) and forced arbitration.
The article is a fairly easy read, and would answer your question "What's Google proposing". They don't seem to be proposing "sole discretion" or forced arbitration. The Indian UPI system specifically involves a central agent, effectively a government body, that is involved in setting up and authenticating all transactions that occur using UPI.
This "protection" is not free, in fact is quite expensive. I think most customers would be better off without them. Many customers when faced with having to pay the 3% for it opt out. And most merchants do not have really any protection at all, at least none that I am aware of.
Compared to the time before cards, merchants are protected from credit fraud by simply being partially connected with the bank so they don't have to hire their own debt collectors.
Nowadays cards are taken for granted and always accepted because it's necessary, but it would still be pretty hard to create your own system that checked if a user had enough funds in the bank to purchase something without either Visa/MC (or I guess Plaid).
I would like to try out the (European?) variation on Escro where in transactions are collected and at the end of a month there's a statement you get to review for a few days, and by default everything's approved.
That would offer buyer protection, seller protection would necessarily relate to some combination of combining contract fulfillment reliability / risk and where fitting holds that either side can clear early if the transaction is canceled. (With notification)
>> "oh shit, someone stole my wallet (/ online identity)"
Isn't one supposed to be responsible for their own passwords/security? Does Microsoft take responsibility if someone steals your windows password or hacks your computer? No, they will just say its you who didn't install the security updates. Why should a banking transaction be any different?
In theory, all you need is institutional trust and KYC, but as soon as you hit a situation like, "oh shit, someone stole my wallet (/ online identity)", you realize why the fees are there.