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Business Standard
3 days ago
- Business
- Business Standard
Not saying users will have to pay for UPI but someone has to bear: RBI Guv
The RBI governor said that the government policies have helped boost the use of UPI among consumers. Malhotra added that UPI transactions have been increasing in the past few months New Delhi The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that government policies are focused on expanding the adoption of the unified payments interface (UPI), during his address at the post-Monetary Policy Committee (MPC) press conference. Responding to a question on whether UPI will remain free, Malhotra said, "I never said that UPI cannot remain free forever. It is not free even now; someone is paying for it." Who pays the cost? Building on this, Malhotra said that somewhere the cost is being paid, but the question is, who pays the cost? "Who pays is important, but not so important as someone footing the bill. For sustainability, whether collectively or individually, someone pays for the costs. The government is subsidising it," said Malhotra. The governor said that the fee for making UPI payments might not necessarily pass down to the user. "I never said that users will have to pay," said Malhotra. Govt aims to expand UPI usage The RBI governor said that the government policies have helped boost the use of UPI among consumers. Malhotra added that UPI transactions have been increasing in the past few months. According to the latest data from the National Payments Corporation of India (NPCI), UPI transactions touched a record high of 19.47 billion in July. In terms of value, it was ₹25.08 trillion, the second-highest after ₹25.14 trillion recorded in May. Banks are charging payment aggregators According to a recent report on ET BFSI, major banks, including ICICI Bank, Axis Bank and Yes Bank, are passing on the UPI charges to payment aggregators (PAs). Payment aggregators are third-party service providers, such as RazorPay, Cashfree, and PayU, that allow businesses to accept online payments. The report added that PAs are excluded from the zero merchant-discount rate (MDR) policy that applies to Person-to-Merchant payments. Clarifying the stance Last month, during a Financial Express BFSI Summit in Mumbai, Malhotra had said that the cost of running UPI will have to be borne by either the government or users. This led to wide speculations that users might soon need to make payments for using UPI. However, Malhotra's latest remarks should help allay these concerns. 'UPI is accessible, cheap, secure, and sustainable…and it will be sustainable only if someone bears the costs," Malhotra had said at the summit. The important thing is that the costs of any service should be paid, whether collectively or by the user, Malhotra had said.
Scroll.in
27-07-2025
- Business
- Scroll.in
UPI has ‘borne good fruits' but costs have to be met for service to be sustainable: RBI governor
Reserve Bank of India Governor Sanjay Malhotra has said that the Unified Payments Interface for digital payments has 'borne good fruits', but cautioned that costs have to be met for any service to be sustainable. His remarks at the Financial Express BFSI Summit in Mumbai on Friday came amid speculation that instant transactions made via UPI to large merchants may attract a fee in the future. 'Payments and money are the lifeline for any economy,' Malhotra said. 'We need to have a universally accessible and efficient system. It is a public infrastructure that needs to be provided.' He noted that currently, there are no charges for using UPI, and that the Union government is subsidising the costs for various players, banks and stakeholders. 'Obviously, some costs have to be paid,' Malhotra said. 'They will have to be defrayed. Right now, it's the government which is defraying those costs. Going forward, how those costs will be met…I am sure the government will be looking at it.' Noting that UPI constitutes important infrastructure, he added that the Union government had taken the view that it should be made available for free and was subsidising it. 'And I would say it has borne good fruits,' Malhotra said. However, the RBI governor added that such a system would only be sustainable if someone bears the cost. 'As long as it is the government or someone else…Costs of any service should be paid whether collectively or by the user,' he added. Malhotra said that the RBI was committed to providing a means of payment that was efficient, secure and accessible. 'We will ensure that we have a good, robust system working in our country,' he said. This comes amid widespread speculation that UPI payments might be subjected to a per-transaction fee called the Merchant Discount Rate, The Indian Express reported. This rate is levied on merchants by banks that process debit and credit card payments. It is usually in the 1% to 3% range. The Union government had waived the Merchant Discount Rate on RuPay debit cards and BHIM-UPI transactions in December 2019, the Financial Express reported. The reintroduction of the fee and whether users will contribute to the cost of maintaining the UPI infrastructure remains uncertain. However, the Union government had rejected reports on the Merchant Discount Rate, saying that such talk was 'completely false, baseless, and misleading', The Indian Express reported. 'Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,' the Union Finance Ministry said on June 11. 'The government remains fully committed to promoting digital payments via UPI.'
Indian Express
25-07-2025
- Business
- Indian Express
Free UPI has borne good fruits, but cost of service has to be paid: RBI Governor Sanjay Malhotra
Amid talk of instant transactions made via the Unified Payments Interface (UPI) to large merchants possibly attracting a fee in the future, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that for the payments system to be sustainable, the cost of running it will have to be borne by either the government or users. Speaking at the Financial Express BFSI Summit in Mumbai, Malhotra said UPI being free had 'borne good fruits' and led to a rapid rise in the number of transactions. However, for any service to be sustainable, its costs had to be met. According to the latest RBI data, there were 18.4 billion UPI transactions conducted in June, up 32 per cent year-on-year. 'This (UPI) is an important infrastructure. The government has taken a view it should be available free and the government is subsidising it. And I would say it has borne good fruits,' Malhotra said. 'The important thing is that the UPI, or any other payment system for that matter, is accessible, cheap, secure, and sustainable…and it will be sustainable only if someone bears the costs. So as long as it's the government or someone else — that's not so important — the important thing is that costs of any service should be paid, whether collectively or by the user.' MDR and govt subsidies for payments Speculation has been rife that UPI payments may be slapped with a per transaction fee called the Merchant Discount Rate (MDR). Usually in the range of 1-3 per cent, the MDR is levied on merchants by banks that process debit and credit card payments. Since January 2020, there has been no MDR on RuPay debit cards and UPI transactions to promote the adoption of digital payments across the country. In lieu of the lack of MDR, the government has been subsidising payments of up to Rs 2,000 made to small merchants through its 'Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (P2M)'. The incentive offered is capped at 0.15 per cent of the transaction value. Large merchants are not covered under this scheme. While 80 per cent of the incentive under the scheme is paid out without any conditions, 10 per cent of the incentive is contingent upon the technical decline of the merchant's bank being less than 0.75 per cent, with the remaining 10 per cent to be paid out when the system uptime of the bank is greater than 99.5 per cent. In recent years, tech glitches in UPI transactions have increasingly come to light. 'As of now, there are no charges and the government is actually subsidising the various players, banks, and stakeholders in this whole UPI payments system. Obviously, some costs have to be paid; they will have to be defrayed. Right now, it's the government which is defraying those costs. Going forward, how those costs will be met will certainly, I am sure the government will be looking at it,' Malhotra said on Friday. From Rs 957 crore in 2021-22, the government's payout under the incentive scheme for UPI transactions rose to Rs 3,268 crore in 2023-24. The revised estimate for the total payout under the scheme in 2024-25 was Rs 2,000 crore, while Rs 437 crore has been budgeted for 2025-26. The government, however, has rejected suggestions that MDR will be charged on UPI transactions. As recently as June, the finance ministry said such talk was 'completely false, baseless, and misleading'. '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,' the finance ministry said on X on June 11. On his part, Malhotra said the RBI remains committed to providing a means of payment that is efficient, secure, and accessible. 'And whatever needs to be done for that, we will ensure that we have a good, robust, secure, accessible payments system working in our country'. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
