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Informist, Friday, Jul. 25, 2025

--RBI Malhotra: Someone will have to bear monetary cost of UPI transactions 

--RBI Malhotra: UPI only sustainable as long as someone bears the cost 

--RBI Malhotra: Need to have universally accessible payment system 

--RBI Malhotra: Committed to provide efficient, secured means of payment 

NEW DELHI – While providing accessible and low-cost payments system remains a priority for the Reserve Bank of India, Governor Sanjay Malhotra said that unified payments interface will only be sustainable as long as someone bears the cost of transactions. "As of now, there are no charges on UPI and the government is bearing the costs. Obviously, some costs have to paid. Right now, the government is paying those costs," Malhotra said at the Modern BFSI Summit organised by the Financial Express in Mumbai. 

"Cost of any service should be paid collectively, or by the user," he said. His comments come against the backdrop of proposals from certain quarters to bring back merchant charges on unified payments interface-based transactions. Merchant discount rate is the charge paid by merchants to banks for processing payments in real-time. Earlier, merchants used to pay a fee amounting to 1% of the total transaction value on card payments. But in 2020, the government waived the charges to promote digital payments in the country.

Malhotra said that the payments system's sustainability depends on covering the infrastructure costs, either by the government or other stakeholders. "It will be sustainable only as long as someone bears the cost...whether that is the government or someone else." The final decision on the future of the zero merchant discount rate framework rests with the government, the governor said. 

Following speculations of bringing back merchant discount rates on UPI transactions, the finance ministry had clarified in June that such claims were "completely false, baseless, and misleading," leading to "needless uncertainty, fear and suspicion" among users. "The government remains fully committed to promoting digital payments via UPI," the ministry had said in a post on X, formerly Twitter. 

Lauding the government's subsidy to the UPI ecosystem, the governor said that it has "borne good fruits". The total volume of UPI transactions totalled 18.40 billion in June, six times the transaction volume of 2.8 billion in July 2021. "We stay committed to providing a digital payment ecosystem which is secure, universally accessible and whatever needs to be done to ensure secure, cheap, efficient system will be done," the governor said.  End

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

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