New Delhi 7 Aug 2025 : Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that the Unified Payments Interface (UPI), which has revolutionized the payment system in the country, cannot remain free forever. He hinted that eventually, the cost of running the digital payment infrastructure may have to be borne by the users.
Speaking at a press conference after the Monetary Policy Committee (MPC) meeting, Malhotra said,
“It is not free even now — someone is paying for it. The government is subsidizing it, but somewhere, the cost is being borne.”
When asked whether the Merchant Discount Rate (MDR) or similar charges could be imposed on consumers, he replied,
“There is a cost, and that cost has to be paid by someone. It is important who pays, but what’s more important is that someone has to pay the bill.”
MDR refers to the fee charged by payment processing companies to merchants and businesses for accepting digital payments. Since January 2020, UPI transactions have been exempt from MDR. The RBI Governor further stated,
“For us, and for its sustainability, it is essential that someone — collectively or individually — pays for it.”
These comments come at a time when some private banks have already started imposing charges on UPI transactions from August 1.
ICICI Bank begins charging for UPI transactions via PhonePe and Google Pay, even as daily UPI volume crosses 700 million
On the other hand, UPI achieved a new milestone on August 2. According to NPCI data, over 700 million transactions were conducted in a single day on UPI, reflecting the system’s strength and popularity. In July 2025, UPI processed 19.47 billion transactions worth approximately ₹25.1 lakh crore, which is 35% higher compared to the previous year.
However, amid this success, ICICI Bank has started charging a per-transaction fee from August 1 for payment aggregators like PhonePe and Google Pay. This move raises questions about the sustainability of UPI’s free model and sparks a fresh debate about the future of digital payments in India.
Summary:
The RBI has issued a new alert for UPI users, cautioning against rising frauds. Users of PhonePe, Google Pay must stay vigilant and follow safety guidelines.