'UPI cannot remain free forever... it isn't free even now': RBI Guv on charging users for UPI

The Reserve Bank of India (RBI) is focusing on expanding the adoption of Unified Payments Interface (UPI), even as conversations continue around who bears the cost of operating the widely used payment system. At the post-Monetary Policy Committee (MPC) press conference on Wednesday, RBI Governor Sanjay Malhotra clarified the central bank’s stance on UPI’s pricing model amid rising speculation.

Addressing a question on whether UPI will remain free for users, Malhotra said: “I never said that UPI cannot remain free forever. It is not free even now; someone is paying for it.” 

He emphasised that while the cost of running UPI exists, the more important question is who pays, not whether it is paid.

“Whether collectively or individually, someone bears the cost. The government is subsidising it. But I never said that users will have to pay,” he reiterated, seeking to calm concerns over potential charges being passed to consumers.

Government policies

Malhotra highlighted that current government policies are aimed at boosting UPI adoption. UPI usage has surged significantly in recent months, reflecting growing trust and convenience among users. According to the National Payments Corporation of India (NPCI), UPI transactions hit a record 19.47 billion in July 2025, amounting to Rs 25.08 lakh crore — the second-highest transaction value on record after May’s Rs 25.14 lakh crore.

Banks charging PAs

As adoption scales up, some banks have started moving toward sustainable monetisation models. ICICI Bank, India’s second-largest private lender, has begun charging fees to payment aggregators (PAs) for UPI transactions. These aggregators, which include companies like Razorpay, Cashfree, and PayU, facilitate digital payments for merchants.

ICICI Bank has communicated that it will charge PAs with an escrow account at the bank a fee of 2 basis points (Rs 0.02 per Rs 100), capped at Rs 6 per transaction. For PAs without an ICICI escrow account, the fee will double to 4 basis points, with a maximum of Rs 10 per transaction.

Other banks, including Axis Bank and Yes Bank, have also started implementing similar fees for PAs — a move aimed at building a more sustainable ecosystem for UPI operations.

UPI and charges

Malhotra’s latest clarification comes after his remarks last month at the Financial Express BFSI Summit, where he stated that the cost of UPI would eventually need to be borne by either the government or the users. That statement had triggered widespread speculation that users may soon face charges for UPI services. “UPI is accessible, cheap, secure, and sustainable — and it will be sustainable only if someone bears the cost,” he had said at the summit.

Industry voices

Industry leaders believe the move toward monetisation is inevitable and beneficial in the long run. Chinmaya Desai, Co-founder and Chief Business Officer of Falcon, called ICICI Bank’s decision a "pragmatic step" that could drive better infrastructure and innovation across the UPI ecosystem.

Paramdeep Singh, a fintech investor, warned that the shift could impact rural merchants and low-margin products like UPI-based credit or BNPL (Buy Now, Pay Later), requiring fintechs to revise their escrow and pricing strategies.

Rohit Mahajan, Founder of plutos ONE, welcomed the change, saying it would enhance backend efficiency and transparency. “Nominal payouts to banks can lead to better fraud control, infrastructure investment, and reliability — ultimately benefiting users,” he said.