New Delhi: Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that while consumers are not directly charged merchant fees for UPI transactions, they already bear the cost indirectly through the broader economy.
Responding to questions on the possibility of introducing merchant fees for UPI payments, Malhotra said it was too early to take a decision, stressing that the immediate priority is to strengthen and expand the country’s digital payments infrastructure.
“It is very premature right now. Costs have to be paid by someone. We all want this public infrastructure to continue becoming stronger and more efficient. That remains our focus for now. Let us watch how developments proceed,” he said.
His remarks come amid the government’s proposal to amend the law that currently prohibits merchant fees on UPI transactions. Reports have also suggested that merchant discount rates (MDR) may be permitted on UPI payments exceeding ₹2,000.
The absence of merchant fees has significantly accelerated UPI adoption but has also reduced revenue opportunities for banks, allowing fintech platforms such as PhonePe and Google Pay to dominate the payments ecosystem. These companies primarily use UPI to attract users before monetising them through other financial products and services.
Malhotra said policymakers remain focused on substantially increasing UPI adoption, adding that any decision on charging fees must be carefully weighed against its potential impact on transaction volumes.
“The goal is to have around 800 million UPI transactions a day. So, imposing a fee is a matter that requires careful consideration. It is premature at this stage,” he said.
He also noted that although consumers may not see a direct charge on their transactions, the cost of maintaining the UPI ecosystem is ultimately borne somewhere within the economy.
“It may not be the same consumer paying directly, but the general economy bears the cost in one form or another, even if it is not visible,” the RBI Governor said.
Malhotra emphasised that ensuring sustained investment in UPI infrastructure and creating viable revenue streams to support its long-term growth remain key priorities for the central bank.
