RBI has funds to pay for UPI platform without having to charge merchants, customers
Reserve Bank of India Governor Sanjay Malhotra on Wednesday (August 5, 2026) said that “someone will have to pay the cost” of UPI transactions, which
Reserve Bank of India Governor Sanjay Malhotra on Wednesday (August 5, 2026) said that “someone will have to pay the cost” of UPI transactions, which are currently free for merchants and customers. The cost is currently being borne by banks and the Payment Corporation of India. Malhotra was responding to media queries in the context of recent moves by the government to pave the way for a charge to be levied on such transactions. If implemented, certain merchants would have to pay banks for the use of the UPI platform, which experts say they would pass on to customers. An analysis by The Hindu has found that the RBI itself has more than enough funds to pay for the UPI platform’s use, without involving any additional charge on merchants or customers. This additional cost would amount to between 3-8.5% of what the central bank transferred to the Union government as its annual surplus.
Further, even with the volume of UPI transactions growing 425% over the last five years, the quantum of surpluses transferred by the RBI to the Union government has grown at more than double that rate. Provisions to make ‘someone’ pay “The costs have to be paid by someone,” Mr. Malhotra said. “We all want that this public infrastructure should continue to strengthen. Let’s wait and watch for further developments on this. “The cost is already getting passed on,” he added. “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. What is important is that we continue to invest and we continue to find the means, whether it is MDR or other things.” A provision in the Taxation and Other Laws (Amendment) Bill, 2026 introduced in Parliament by the government on Tuesday (August 4, 2026) dilutes the earlier restrictions imposed on banks from imposing charges such as a Merchant Discount Rate (MDR) on UPI transactions.
Instead, it says that the government can notify the kinds of transactions that can attract such a charge. Cost of running UPI According to sources in the government, the proposal to allow banks to levy an MDR is currently limited to a small sub-set of merchants — those with an annual turnover of Rs 1-1.5 crore — and to transactions above ₹2,000 in value. However, the wording of the Bill provides an avenue for this charge to be levied on a wider set of transactions in the future. According to banking industry officials, the UPI platform currently costs about ₹0.4-1 per transaction to operate and maintain. Official data shows that 24,161.69 crore UPI transactions were conducted in 2025-26. This would peg the cost of running the platform at ₹9,664 to ₹24,161 crore per year. Surplus available The RBI earned approximately ₹4.3 lakh crore in 2025-26.
The BriefWire