Not saying users will have to pay for UPI but someone has to bear: RBI Guv

The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that government policies are focused on expanding the adoption of the unified payments interface (UPI), during his address at the post-Monetary Policy Committee (MPC) press conference.

Responding to a question on whether UPI will remain free, Malhotra said, "I never said that UPI cannot remain free forever. It is not free even now; someone is paying for it."

Who pays the cost?

Building on this, Malhotra said that somewhere the cost is being paid, but the question is, who pays the cost?

"Who pays is important, but not so important as someone footing the bill. For sustainability, whether collectively or individually, someone pays for the costs. The government is subsidising it," said Malhotra.

The governor said that the fee for making UPI payments might not necessarily pass down to the user. "I never said that users will have to pay," said Malhotra.

Govt aims to expand UPI usage

The RBI governor said that the government policies have helped boost the use of UPI among consumers. Malhotra added that UPI transactions have been increasing in the past few months.

According to the latest data from the National Payments Corporation of India (NPCI), UPI transactions touched a record high of 19.47 billion in July. In terms of value, it was ₹25.08 trillion, the second-highest after ₹25.14 trillion recorded in May.

Banks are charging payment aggregators

As earlier reported by Business Standard, major banks, including ICICI Bank, Axis Bank and Yes Bank, are passing on the UPI charges to payment aggregators (PAs). Payment aggregators are third-party service providers, such as RazorPay, Cashfree, and PayU, that allow businesses to accept online payments.

The report added that PAs are excluded from the zero merchant-discount rate (MDR) policy that applies to Person-to-Merchant payments.

Clarifying the stance

Last month, during a Financial Express BFSI Summit in Mumbai, Malhotra had said that the cost of running UPI will have to be borne by either the government or users. This led to wide speculations that users might soon need to make payments for using UPI. However, Malhotra's latest remarks should help allay these concerns.

“UPI is accessible, cheap, secure, and sustainable…and it will be sustainable only if someone bears the costs," Malhotra had said at the summit. The important thing is that the costs of any service should be paid, whether collectively or by the user, Malhotra had said.