Overview

• Sanjay Malhotra signalled that subsiding UPI through the zero-merchant discount rate policy is no longer sustainable and that costs must be allocated to users or other stakeholders.
• Daily transactions on UPI have doubled from 310 million to over 600 million in two years, placing strain on back-end systems maintained by banks, payment service providers and NPCI.
• The RBI governor affirmed that any change to the zero-fee model hinges on government approval; the finance ministry has rejected plans to reintroduce merchant discount rates.
• Industry representatives have cautioned that without a revenue stream from transaction fees, UPI’s infrastructure expenses cannot be met in the long term.
• A recent survey found that nearly 73% of users oppose transaction fees and may cease using UPI if charges are imposed.