RBI Governor Sanjay Malhotra has responded to growing speculation over the possibility of charges on UPI transactions, saying it is too early to comment on the issue but emphasizing that maintaining the country’s digital payment infrastructure comes at a cost.
Speaking after the Monetary Policy Committee (MPC) meeting, Malhotra was asked whether UPI transactions could attract charges in the future. He said the matter remains premature as the government is still considering proposed legislative changes. However, he added that “someone has to pay the cost” of running and strengthening the digital payments ecosystem.
The governor clarified that while UPI appears free for users, the infrastructure behind the platform is expensive to maintain. According to him, these costs are already being borne by different stakeholders, even if they are not directly charged to consumers.
The remarks come amid reports suggesting that the government is considering changes that could eventually allow the introduction of a Merchant Discount Rate (MDR) on certain UPI transactions. At present, banks and payment service providers are not allowed to levy MDR on UPI payments, as the government prohibited such charges in January 2020 and has been compensating the industry through subsidies.
However, with UPI transaction volumes rising significantly over the years, industry participants have argued that government incentives no longer fully cover the operational costs of maintaining the payment network.
The discussion gained momentum after the Finance Ministry introduced a bill in the Lok Sabha proposing amendments to the Payment and Settlement Systems Act, 2007, along with changes to tax laws. If passed, the revised legal framework could enable the government to determine, through notifications, which digital payment modes will continue to enjoy zero MDR and which may not.
According to Finance Ministry sources cited by Jagran.com, the National Payments Corporation of India (NPCI) is expected to issue detailed operational guidelines once the legislative process is completed. Until then, no decision has been taken to impose charges on UPI transactions, and the existing zero-MDR framework remains in place.