UPI Won't Be Free Forever: RBI Governor
- RBI Governor Sanjay Malhotra says the government currently subsidizes UPI, but someone always bears the cost.
- He hints that users may eventually have to pay as part of ensuring sustainability.
- Some private banks have begun levying fees on UPI transactions from August 1.
Reserve Bank of India (RBI) Governor Sanjay Malhotra has indicated that Unified Payments Interface (UPI), the widely used digital payment system in India, may not remain free for users in the long run. Addressing the post-Monetary Policy Committee (MPC) press conference, Malhotra highlighted the hidden costs of maintaining UPI infrastructure.
“It is not free even now someone is paying for it. The government is subsidising it, but somewhere the costs are being paid”, Malhotra said.
He was responding to a query regarding the possible reintroduction of merchant discount rates (MDR) or similar charges being passed on to users. MDR, a fee charged to merchants by payment processors, has not applied to UPI transactions since January 2020.
“There are costs, and these costs have to be paid by someone. Who pays is important, but more important is that someone foots the bill”, Malhotra stated, stressing the long-term sustainability of the UPI ecosystem.
His comments come amid reports that some private banks have started levying charges on certain UPI transactions from August 1, sparking discussions about the future cost burden on users.
