{"id":1298838,"date":"2025-08-14T13:44:26","date_gmt":"2025-08-14T08:14:26","guid":{"rendered":"https:\/\/trak.in\/stories\/?p=1298838"},"modified":"2025-08-14T13:45:01","modified_gmt":"2025-08-14T08:15:01","slug":"upi-cant-be-free-forever-says-rbi-governor-will-users-pay-for-it","status":"publish","type":"post","link":"https:\/\/trak.in\/stories\/upi-cant-be-free-forever-says-rbi-governor-will-users-pay-for-it\/","title":{"rendered":"UPI Can’t Be Free Forever, Says RBI Governor (Will Users Pay For It?)"},"content":{"rendered":"\n

RBI Governor Sanjay Malhotra has reiterated that while India\u2019s Unified Payments Interface (UPI) remains free for users, the operational costs are being subsidised and someone is already bearing them. Speaking at a post-policy press conference after the Monetary Policy Committee maintained status quo on rates, he clarified that his earlier remarks did not mean UPI would never be free for consumers, but that costs exist and must be covered by someone. Currently, the government is subsidising UPI transactions, but the long-term sustainability of the zero-cost model remains in question.<\/p>\n\n\n\n

\"UPI<\/figure>\n\n\n\n

ICICI Bank\u2019s New UPI Processing Fees Spark Debate on Zero-Cost Model<\/strong><\/p>\n\n\n\n

Introduced in 2016 by the RBI-run National Payments Corporation of India (NPCI), UPI now accounts for around 80%<\/a> of retail digital payments, handling about 30 crore transactions monthly, with 31 crores in July. Since January 2020, UPI transactions have been exempt from merchant discount rate (MDR), a fee typically charged to merchants by banks for processing digital payments. However, from August 1, ICICI Bank became the first to formally introduce processing charges for payment aggregators, sparking debate over the viability of the free model.<\/p>\n\n\n\n

ICICI Bank now charges payment aggregators with escrow accounts at the bank 2 basis points (\u20b90.02 per \u20b9100), capped at \u20b96 per transaction, and those without such accounts 4 basis points, capped at \u20b910. Transactions routed directly through a merchant\u2019s ICICI Bank account remain exempt. These developments follow concerns over how the costs of UPI infrastructure will be met without burdening consumers.<\/p>\n\n\n\n

Malhotra Highlights Government\u2019s Role in Securing UPI\u2019s Long-Term Sustainability<\/strong><\/p>\n\n\n\n

Malhotra emphasised that while deciding who will bear the costs is important, the larger point is that the expenses must be paid for\u2014whether collectively or individually. He acknowledged that UPI\u2019s free access, backed by government subsidies, has driven remarkable growth in digital payments, with June 2025 recording 18.4 billion UPI transactions, up 32% year-on-year. He also noted that while the current model has yielded significant benefits, the government will ultimately decide on its future funding structure to ensure its sustainability.<\/p>\n\n\n\n

Summary:<\/strong><\/p>\n\n\n\n

RBI Governor Sanjay Malhotra said UPI\u2019s free model is subsidised and incurs real costs, with its sustainability under review. ICICI Bank\u2019s new processing fees for payment aggregators have revived debate on funding the system. The government will decide future cost-sharing to maintain UPI\u2019s rapid digital payment growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

RBI Governor Sanjay Malhotra has reiterated that while India\u2019s Unified Payments Interface (UPI) remains free for users, the operational costs are being subsidised and someone is already bearing them. Speaking at a post-policy press conference after the Monetary Policy Committee maintained status quo on rates, he clarified that his earlier remarks did not mean UPI […]<\/p>\n","protected":false},"author":26,"featured_media":1298849,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[185,41],"class_list":["post-1298838","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-rbi","tag-upi"],"acf":[],"yoast_head":"\nUPI Can't Be Free Forever, Says RBI Governor (Will Users Pay For It?) - Trak.in - Indian Business of Tech, Mobile & Startups<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/trak.in\/stories\/upi-cant-be-free-forever-says-rbi-governor-will-users-pay-for-it\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UPI Can't Be Free Forever, Says RBI Governor (Will Users Pay For It?) - Trak.in - Indian Business of Tech, Mobile & Startups\" \/>\n<meta property=\"og:description\" content=\"RBI Governor Sanjay Malhotra has reiterated that while India\u2019s Unified Payments Interface (UPI) remains free for users, the operational costs are being subsidised and someone is already bearing them. 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