Reserve Bank of India (RBI) Governor Sanjay Malhotra has clarified that he never stated that Unified Payments Interface (UPI) cannot remain free forever. Speaking at the post-RBI policy conference, Malhotra said, “I want to clarify that I never said UPI can’t remain free forever. There are costs, and these costs have to be paid by someone.”

He further explained that while UPI is currently free for users, the costs are being borne elsewhere, primarily subsidized by the government. “The question really is – who pays for it? For sustainability, whether collectively or individually, someone must bear the cost,” he added.

Malhotra’s remarks come amid UPI’s rapid growth, with daily transactions doubling in just two years from 31 crore to over 60 crore. This surge has increased the strain on backend infrastructure maintained by banks, payment service providers, and the National Payments Corporation of India (NPCI).

Currently, due to a government-mandated zero merchant discount rate (MDR) policy, there is no direct revenue stream from UPI transactions, making the model financially challenging for industry players. While acknowledging the government’s decision to keep UPI free, Malhotra emphasized that long-term sustainability requires that “its cost should be paid, whether collectively or by the user.”