UPI may not stay free forever, warns RBI governor amid growing subsidy burden
Malhotra underlined that while India's commitment to accessible, secure digital payments remains firm, long-term sustainability cannot be overlooked.
- Jul 25, 2025,
- Updated Jul 25, 2025 4:30 PM IST
The Reserve Bank of India has signalled that the era of entirely free digital transactions may be nearing its end. As the Unified Payments Interface (UPI) continues to scale new heights, RBI Governor Sanjay Malhotra stressed the need to make the system financially sustainable.
Malhotra noted that while UPI currently runs without any user charges, the government has been subsidising banks and other participants to keep the system free.
“Payments and money are a lifeline,” he said while speaking at a event by Financial Express. “We need a universally efficient system. As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Obviously, some costs have to be paid.”
Malhotra underlined that while India's commitment to accessible, secure digital payments remains firm, long-term sustainability cannot be overlooked. “Costs will have to be paid. Someone will have to bear the cost,” he added.
His remarks come amid a sharp rise in UPI usage — daily transactions have doubled in just two years, soaring from 31 crore to over 60 crore.
Malhotra also clarified that the decision on whether to continue with the current zero MDR (merchant discount rate) policy ultimately lies with the government.
On banking reforms, he pointed to past mergers of public sector banks, which he said have delivered “good results.” Future consolidation, he said, would be considered only if it makes economic sense.
The Reserve Bank of India has signalled that the era of entirely free digital transactions may be nearing its end. As the Unified Payments Interface (UPI) continues to scale new heights, RBI Governor Sanjay Malhotra stressed the need to make the system financially sustainable.
Malhotra noted that while UPI currently runs without any user charges, the government has been subsidising banks and other participants to keep the system free.
“Payments and money are a lifeline,” he said while speaking at a event by Financial Express. “We need a universally efficient system. As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Obviously, some costs have to be paid.”
Malhotra underlined that while India's commitment to accessible, secure digital payments remains firm, long-term sustainability cannot be overlooked. “Costs will have to be paid. Someone will have to bear the cost,” he added.
His remarks come amid a sharp rise in UPI usage — daily transactions have doubled in just two years, soaring from 31 crore to over 60 crore.
Malhotra also clarified that the decision on whether to continue with the current zero MDR (merchant discount rate) policy ultimately lies with the government.
On banking reforms, he pointed to past mergers of public sector banks, which he said have delivered “good results.” Future consolidation, he said, would be considered only if it makes economic sense.