Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Wednesday that Unified Payments Interface (UPI), which revolutionize the payment system in the country, cannot always be free.
He indicated that the cost of running a digital payment infrastructure may have to be put on users.
Malhotra said in a press conference held after the Monetary Policy Committee (MPC) meeting, “It is still not free, it is paying some or the other. The government is giving it subsidy, but somewhere it is being paid somewhere.”
When asked whether merchant discount rate (MDR) or similar fees could be levied on consumers, he said, “The cost is and this cost is to be paid to someone.
MDR is the fee that payment processing companies charge digital payments from shops and businesses. The UPI transactions have been exempted from MDR since January 2020.
The RBI Governor further said, “It is necessary for us and for its stability that someone should pay for it collectively or personally.” This comment has come at a time when some private banks have started charging UPI transactions from 1 August.
ICICI Bank started paying charges on PhonePe and Google, while 70 crore transactions are being done daily from UPI. On the other hand, UPI) has set a new record on 2 August. According to NPCI data, the UPI has over 700 million transactions on the same day, reflecting the strength and popularity of the system. In July 2025, UPI processed 19.47 billion transactions, which cost around Rs 25.1 lakh crore, which is 35% higher than last year.
But amidst this happiness, the ICICI Bank has started charging per transaction fee from payments from August 1 such as PhonePe and Google Pay. This step questions the stability of UPI’s free model and wages a new debate about the future of digital payment.