Say Goodbye to Free UPI? What the RBI Governor Just Hinted Will Surprise You

The Reserve Bank of India (RBI) Governor Sanjay Malhotra recently said that UPI (Unified Payments Interface) transactions may not stay free forever. Speaking at the Financial Express BFSI Summit in Mumbai, he explained that while users currently enjoy free UPI services, the cost of maintaining the system is covered by the government.

The government currently subsidises banks, payment companies, and the National Payments Corporation of India (NPCI) to keep UPI free. But Malhotra warned that “some costs have to be paid” and that “any important infrastructure must bear fruit.”

Why UPI Charges May Be Introduced

UPI has grown at a massive scale. It processed over ₹24.03 lakh crore through 18.39 billion transactions in June 2025 alone, making it the leader in global digital payments. However, this growth has put a lot of pressure on the backend systems that keep it running. These are maintained mostly by banks and NPCI.

The RBI Governor pointed out that for UPI to be sustainable in the long run, its costs must be shared either by users or by the industry players.

Merchant Discount Rate (MDR) Policy

One major reason for the strain is the zero Merchant Discount Rate (MDR) policy. Since December 2019, merchants do not pay any fee for accepting payments through UPI or RuPay debit cards. MDR is usually a small charge (1–3%) taken by banks to process payments.

With no MDR and zero user charges, UPI currently generates no revenue, making it hard to support such a large system without ongoing government help.

Will Users Start Paying for UPI?

It is still unclear whether the government will bring back MDR or make users pay for UPI transactions in the future. But as the system grows, the idea of sharing costs is gaining traction.

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Read more: From Balance Checks to AutoPay Limits: Big UPI Changes Coming from August 1, 2025.

Conclusion

UPI has transformed digital payments in India. But with rising costs and growing pressure on the system, the free ride may not last forever. The government and RBI may soon need to rethink the current no-fee model to keep UPI running smoothly for the future.

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