Bad news for Google Pay, PhonePe, Paytm, Amazon Pay users, no more free UPI? RBI makes BIG statement, says ‘costs will…’

The Reserve Bank of India (RBI) has given a major indication that the era of completely free digital transactions may soon come to an end. Despite the Unified Payments Interface (UPI) consistently setting new records, RBI Governor Sanjay Malhotra has explained the need behind this possible shift in a Financial Express interview.

RBI Guv OnFuture Of UPI

“Payments and money are a lifeline. We need a universally efficient system. As of now, there are no charges on the UPI service. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Some costs have to be paid,” Malhotra told the Financial Express.

“Any important infrastructure must bear fruit,” he said, adding that for any service to be truly sustainable, “its cost should be paid whether collectively or by the user.”

Malhotra further added that the unprecedented scale of UPI operations has intensified the strain on the service’s backend infrastructure, which is largely maintained by banks, payment service providers, and the National Payments Corporation of India (NPCI).

RBI Governor On UPI System Cost

He stated the importance of making the UPI system financially sustainable, pointing out that currently no charges are levied on UPI transactions. To maintain this zero-cost system, the government is subsidizing banks and other companies. However, Malhotra noted that such a model cannot be sustained indefinitely, hinting at the possibility of charges being introduced on UPI transactions in the future.

Given the rapid rise in UPI usage, the RBI Governor’s remarks are highly significant. In the past two years, UPI transactions have doubled, with over 600 million transactions now taking place daily.

Furthermore, due to the government’s zero merchant discount rate (MDR) policy, UPI transactions currently generate no revenue. This has led industry stakeholders to repeatedly warn that the existing model is financially unsustainable.

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