Will UPI Remain Free? RBI Governor Says 'Someone Has To Bear The Cost'

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New Delhi: The Reserve Bank of India is pushing to make UPI even more popular while addressing questions about who pays to keep the system running. Speaking at the post‑MPC press conference on Wednesday, RBI Governor Sanjay Malhotra clarified the central bank’s view on UPI charges, putting an end to the ongoing speculation.//

Responding to a question on whether charges like the merchant discount rate (MDR) might eventually be passed on to customers, Malhotra said, “I never said that it can remain free forever.” MDR is the fee that payment processors charge businesses for accepting card payments.//

The governor, who had earlier said that UPI isn’t completely free, explained that his point was to underline the costs involved in running the system even if users don’t pay directly. “There are costs, and these costs have to be paid by someone. Who pays is important but not as important as the fact that someone is footing the bill,” he said.//

Malhotra pointed out that UPI isn’t completely free, as the government is currently covering its costs through subsidies. He clarified that he never said users would be charged for using it. Instead, he signaled that any decision about whether UPI remains free or not rests with the finance ministry.//

ICICI Bank has reportedly become the first bank to introduce processing charges for Payment Aggregators (PAs) handling UPI transactions, starting August 1, 2025, according to ET Wealth Online. Though the bank has not commented officially, sources told ET that the new charges were communicated to PAs in late June.//