UPI Charges: RBI Governor Sanjay Malhotra has hinted that UPI payments may not remain free forever. Speaking at a media event, he explained that, for now, users don’t pay any fees for using UPI.
However, the government currently provides subsidies to banks and other stakeholders to help run the real-time UPI payment system.
He added that while India is focused on making digital payments safe and efficient, maintaining the system’s stability also comes with a cost — and eventually, someone will have to bear it.
UPI Usage Is Rising Rapidly
The RBI Governor brought up UPI-related costs at a time when its usage is growing very fast. In just two years, the number of daily UPI transactions has almost doubled — from 310 million to over 600 million.
This sharp increase has put pressure on the backend systems, which are mostly handled by banks, payment service providers, and the National Payments Corporation of India (NPCI).
Since there is no revenue for the government from UPI payments due to zero merchant discount rate (MDR), many industry experts believe this model may not be financially sustainable in the long run.
Governor Also Spoke About Possible Rate Cuts
Along with discussing the potential for UPI charges, the RBI Governor also talked about a possible interest rate cut.
He said that monetary policies are made with a focus on the future, so current inflation numbers are less important than what inflation might look like over the next 6 to 12 months. Currently, the inflation rate is at 2.1%.
He noted that within just two months, a 50 basis point cut in the repo rate has been fully passed on to new loans.
Although credit growth has slowed compared to last year, it is still above the 10-year average.
On digital currency, he said that the RBI remains cautious and is still testing its effects through a special committee.
