UPI transactions may not stay free forever, RBI Governor Sanjay Malhotra says ‘Someone has to pay’

RBI Governor Sanjay Malhotra hinted that India’s Unified Payments Interface (UPI) may not remain free forever, highlighting the importance of a sustainable funding model. Malhotra clarified that while UPI transactions are free for the users currently, the system has real costs which need to be bear by someone. “Who pays is a matter of detail, what matters more is that someone is paying,” he added.

UPI is now a world leader in digital payments, with more than 640 million transactions being processed every day and processing Rs 24 lakh crore in June 2025 alone. This marks a 32% increase year on year from 13.88 billion transactions during the same month last year. UPI has driven 85% of India’s digital payments and almost 60% worldwide, as per the International Monetary Fund.

The remarks of RBI Governor follow increasing signals that the free model for UPI will be altered. ICICI Bank has rolled out processing fees for Payment Aggregators (PAs) that process UPI transactions from August 1, 2025. The bank will levy 2 basis points, Rs. 0.02 for every Rs. 100 up to Rs. 6 per transaction for PAs with escrow accounts and 4 basis points up to Rs. 10 for those without escrow accounts.

Malhotra highlighted that cost, accessibility, and security are priorities but sustainability will be reliant on mechanisms of cost sharing. “The key thing is that the UPI, or indeed any other payments system for that matter, is accessible, inexpensive, secure, and sustainable… and it will only be sustainable if someone is bearing the costs,” he added.

The present setup is wholly financed by the government, and banks and other parties are not to bear any direct cost burden of processing such enormous volumes of transactions. Malhotra’s comments indicate that a change might be unavoidable.

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