'UPI can’t stay free forever': RBI Governor Sanjay Malhotra hints cost of running digital payments infrastructure may fall on users

New Delhi: Reserve Bank of India Governor Sanjay Malhotra on Wednesday said the unified payments interface (UPI), which has revolutionised the payments system in the country, may not stay free forever, indicating that eventually the cost of running the digital payments infrastructure might be passed on to the users.  

“It is not free even now someone is paying for it. The government is subsidising it but somewhere the costs are being paid,” Malhotra said while addressing the post-Monetary Policy Committee (MPC) press conference.

Responding to a question on whether merchant discount rate (MDR) or similar charges could be passed on to consumers, the RBI Governor said, “there are costs and these costs have to be paid by someone. Who pays is important but not so important than someone footing the bill.”  

MDR is the fee levied by payment processing companies on shops and other businesses accepting digital payments. UPI transactions have been exempt from MDR payments since January 2020.

“It is important for us and for the sustainability whether collectively or individually someone pays for it,” he added.

RBI Governor’s comments come amid reports that some private banks have started levying fees on UPI transactions effective from August 1.