'Never Said UPI Can't Remain Free Forever', RBI Governor Clarifies

Reserve Bank of India Governor Sanjay Malhotra clarified that he never said 'UPI can't remain free forever'.

"I want to clarify that I never said that UPI can't remain free forever. There are costs and that these costs have to be paid by someone," Malhotra said answering a query at the post RBI policy conference.

"...it is important for us and for the sustainability whether collectively or individually someone pays for it. I never said that it cannot remain free forever. My sense is that it is still not free, till now someone else is paying for it," he said.

"The government is subsidising it and somewhere the costs are being paid. The question really is - who pays for it?," he asked.

Last month, Malhotra made it clear that while India remains committed to ensuring that digital payments are efficient, secure, and accessible, the sustainability of the infrastructure cannot be ignored.

"Costs will have to be paid. Someone will have to bear the cost," he had said at a media fireside chat.

His commentary has come at a time when UPI has seen explosive growth. In just two years, daily UPI transactions have doubled from 31 crore to over 60 crore per day.

This unprecedented scale has added pressure on the backend infrastructure, much of which is maintained by banks, payment service providers, and the National Payments Corporation of India.

With no revenue stream from UPI transactions owing to a government-mandated zero merchant discount rate policy, industry players have repeatedly flagged the model as financially unsustainable.

“Any important infrastructure must bear fruits,” Malhotra had said, while acknowledging the government's decision to keep UPI free for now. But he cautioned that for any service to be truly sustainable, "its cost should be paid whether collectively or by the user."