UPI 'not free even now': RBI governor clarifies stance on possible future charges

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that the Unified Payments Interface (UPI) ecosystem may not remain cost-free indefinitely, adding that the government will ultimately decide who bears the operational expenses.

At a press conference following the central bank’s monetary policy decision, the RBI Governor was asked whether charges such as the merchant discount rate (MDR) could be passed on to consumers.

“I never said it can remain free forever,” Malhotra said.

He reiterated earlier remarks that while UPI is currently a zero-charge platform for users, its infrastructure is not without cost.

“There are costs, and these costs have to be paid by someone. Who pays is important but not as important as the fact that someone is footing the bill,” the central bank governor said.

“My sense is that it is not free even now, and someone is paying for it. The government is subsidising it, but somewhere, the costs are being paid,” he added.

His comments follow reports that some banks have started levying fees on UPI transactions involving certain merchant categories or routed through payment aggregators, raising questions over the long-term viability of the no-cost model.

Introduced in 2016, UPI currently accounts for about 80% of retail digital payments in India. Since January 2020, UPI transactions have been exempt from MDR, a fee typically charged to merchants by banks for processing digital payments.

"Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading," the Finance Ministry posted on X.

"Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens. The Government remains fully committed to promoting digital payments via UPI."

UPI processed a record 18.68 billion transactions in May 2025, up from 17.89 billion in April, with transaction value rising to ₹25.14 lakh crore from ₹23.95 lakh crore, according to NPCI data.