UPI Growth Must Be Backed by Sustainable Funding: RBI Guv

Mumbai: RBI governor Sanjay Malhotra on Friday flagged the need for a sustainable financial model to support the rapid growth of UPI and ensure the long-term viability of the digital payments infrastructure.

“About two years ago the number of transactions per day of UPI were about 31 crore per day. In two years it has doubled — more than 60 crore a day,” Malhotra said, adding that the rising volumes make it essential to cover operational costs. He was speaking at a fireside chat in an event organised by Financial Express.

“Costs will have to be paid, someone will have to bear the cost. It is an important infrastructure,” he said. “Right now it is the government which is defraying those costs. Going forward, how those costs are handled is very important. Whatever needs to be done, we will ensure that we have a good, robust, secure, accessible payment system working in our country.”

He said the government’s decision to subsidize UPI transactions had helped boost adoption. “The government has taken a view that it should be available free and the government is subsidizing it. And I would say that it has borne good fruits,” Malhotra said.

The RBI chief’s comments come amid industry demands to reinstate the merchant discount rate (MDR) on UPI payments — especially for high-value transactions or large merchants. The MDR was set to zero from Jan 1, 2020, to promote digital payments, but banks and fintechs argue that the zero-charge regime is no longer sustainable due to rising tech and infra costs.

While payment players have lobbied for a modest MDR on bigger transactions, the government has repeatedly ruled out any direct levy on users or merchants, calling UPI a “digital public good.” Instead, it has offered incentives to ecosystem players. Public sentiment has also been strongly against charges — surveys show that most users would cut down or stop using UPI if transaction fees were introduced.


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