Reserve Bank of India (RBI) Governor Sanjay Malhotra has clarified that there is currently no plan to levy any charges on Unified Payments Interface (UPI) payments. This statement comes in response to queries about the long-term sustainability of the UPI system and who will bear the costs associated with its operation.

UPI has become an increasingly popular method for digital payments in India. Developed by the National Payments Corporation of India (NPCI), it accounts for approximately 80% of retail digital payments in the country. In June 2025, UPI recorded 18.4 billion transactions, a 32% increase year-on-year. The average monthly transaction volume is around 30 crore, with 31 crore transactions processed in July 2025. The popularity of UPI is partly attributed to the fact that it is currently free for users.

However, Governor Malhotra has pointed out that while UPI is currently free for users, there are costs associated with its operation. These costs are currently being subsidized by the government, which supports banks and other fintech ecosystem stakeholders to keep UPI free. Speaking at an event organized by the Financial Express in July 2025, Malhotra stated that this arrangement may not be sustainable in the future. "As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders. Obviously, some costs have to be paid. Someone will have to pay for it if the service is to be genuinely sustainable," he said.

During a post-Monetary Policy Committee (MPC) press conference on Wednesday, August 6, 2025, Malhotra addressed reporters' questions regarding his earlier statement on the issue. He clarified that he never said UPI could not stay free forever but emphasized that the costs associated with UPI transactions need to be paid by someone. "The question was whether charges like MDR would be passed on to consumers. I responded by saying that there are costs involved," he explained.

Malhotra stressed that it is not as important who pays the costs as the fact that someone is already footing the bill. "My sense is that it is not free even now, and someone is paying for it. The government is subsidising it, but somewhere, the costs are being paid," he added.

Since January 2020, UPI transactions have been exempt from the Merchant Discount Rate (MDR), a fee typically charged to merchants by banks for processing digital payments. When asked whether charges like MDR could be passed on to consumers, Malhotra clarified that the government will ultimately decide who bears the operational expenses.

In summary, while the RBI Governor has stated that the long-term zero-cost model of UPI may not be sustainable, he has clarified that there is no plan to levy any charges on UPI payments currently. The government is subsidizing the costs, but the question of who will bear the operational expenses in the future remains open.