UPI Transactions: Now UPI will not be free, charges will be levied on every transaction
The Reserve Bank of India (RBI) has suggested that UPI transactions may not remain free in the future, as the current model is not financially sustainable. Although the government is currently providing subsidies to keep UPI services free, RBI Governor Sanjay Malhotra emphasized that this arrangement cannot be maintained indefinitely. He explained that while UPI has been achieving impressive growth, it is essential to cover operational costs and ensure the long-term viability of the system. As a result, introducing charges on UPI transactions is being considered to support the financial infrastructure and maintain the security of digital payments.
This statement of the RBI Governor is very important in view of the increasing use of UPI. Transactions through UPI have doubled in the last two years. Now more than 60 crore transactions are taking place daily.
Sanjay Malhotra said in a program of Financial Express, ‘Payment and money are lifelines. We need a system that is better in every way. Right now there is no charge. The government is giving subsidy to banks and other stakeholders in the UPI payment system. Obviously, some cost will have to be paid.’ This means that the cost of running UPI will have to be borne by someone.
Expenses will have to be taken care of
The RBI governor also said that India is committed to making digital payments easy and secure. But, to run it for a long time, expenses will have to be taken care of. He said, ‘Expenses will have to be paid. Someone will have to bear the cost.’
Sanjay Malhotra also clarified that the decision whether to continue the current policy of MDR (Merchant Discount Rate) or not is to be taken by the government. MDR is the charge that merchants pay to the bank when a customer makes a payment by card or UPI.
Sanjay Malhotra also talked about the merger of public sector banks. He said that the mergers that have taken place earlier have given ‘good results’. In future, banks will be merged only when it will benefit financially.
What does this mean?
The Reserve Bank of India (RBI) now wants to make UPI financially self-reliant. Instead of being completely dependent on government subsidy. The simplest meaning of this is that in future user charges may be levied on UPI transactions. The RBI Governor’s statement that ‘someone has to bear the cost’ indicates this. This fee can be very low. But, going forward, it will mark the end of the era of ‘completely free’ transactions.
