Charges On UPI Transactions? RBI Governor Says 'Costs Have To Be Paid By Someone'
The RBI Governor has indicated that UPI transactions may soon face a Merchant Discount Rate (MDR) to cover the rising costs of maintaining the payment infrastructure. While currently free for users, the government is considering legislative amendments to allow fees on transactions above a certain threshold.
Why it matters
Introducing fees on UPI could impact the adoption of digital payments in India and shift the financial burden of maintaining the massive payment network from the government to merchants.
UPI transactions, currently free of charge, may soon have a price tag.In a press conference after announcing the repo rate on Wednesday, RBI Governor Sanjay Malhotra was asked if there will be charges on UPI transactions. Responding to this, he said, "It is very premature to talk right now. The government is still carrying out the amendment. The costs have to be paid by someone. We all want that this public infrastructure should continue to strengthen. Let's wait and watch for further developments on this."The statement comes amid reports that a Merchant Discount Rate (or MDR) might be levied on UPI transactions. "The cost is already getting passed on. It may not be directly on to the very user, but someone is paying the cost. This is what I meant when I said someone will have to pay the cost.
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