MUMBAI: Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that while UPI is free for users, it still has costs — and someone is paying for it. Right now, the government is covering those costs, but in the future, it may decide who should actually pay.
He was speaking at a press conference After the RBI’s latest policy meeting. When asked about his earlier comments on UPI charges, he explained:
“I didn’t say UPI will stop being free. I only said it has costs, and someone has to pay.”
Can Banks or Shops Charge Customers?
Some people asked if charges like MDR (Merchant Discount Rate — a fee banks take from shops for processing payments) would be passed on to customers. Malhotra answered:
“There are real costs involved. Whether banks, shops, or someone else pays — that’s a separate issue. What matters is that the system is not really free even now.”
He, also said that UPI is currently funded by the government, but this may not continue forever.
What Is UPI and Why It Matters
UPI (Unified Payments Interface) was launched in 2016 by NPCI (National Payments Corporation of India), under the guidance of RBI. Today, it makes up about 80% of all retail digital payments in India.
In July, UPI handled over 31 crore transactions. On average, 30 crore transactions happen every month. This shows how important UPI is to India’s digital economy.
Since January 2020, UPI payments have been exempting from MDR charges, making it free for users and affordable for businesses.
Banks Start Adding Charges
Recently, ICICI Bank started charging fees for some UPI payments made through payment aggregators (companies that help businesses accept digital payments). Here’s what they are charging:
- If the aggregator has an escrow account with ICICI Bank:
0.02% (2 paisa per ₹100), max ₹6 per transaction - If they don’t have an ICICI account:
0.04% (4 paisa per ₹100), max ₹10 per transaction - If the payment is made directly to the merchant’s ICICI Bank account:
No extra charge
This has raised concerns about whether UPI will remain free in the long run.
Government Says: No Plans to Charge UPI Users
In June, the Finance Ministry rejected reports that UPI users will have to pay charges. It said the news was false and misleading and that the government is still fully supporting free UPI payments.
Malhotra’s Final Message: UPI Must Be Sustainable
Governor Malhotra ended by saying:
“UPI is a very important digital system. The government wants to keep it free and is paying for it. That’s helped UPI grow fast — and that’s a good thing.”
But he also warned that in the long run, someone will have to pay to keep the system running. It could be the government, banks, businesses — or a mix of all.
In June alone, there were 18.4 billion UPI transactions, which is 32% more than last year, showing how fast it is growing.
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