Until now, we’ve all made UPI payments freely — whether it’s ₹1 or ₹1 lakh — without ever worrying about fees. But things might be about to change.
On Friday, a statement by Reserve Bank of India (RBI) Governor Sanjay Malhotra sent shockwaves through the nation. He openly said what many in the financial world have quietly discussed: UPI payments might not remain free forever. His words have left millions of Indians anxious about what lies ahead for Digital India’s most-used payment system.
UPI Is Free — But At What Cost?
As of now, UPI transactions are free for users. No matter the amount, you’re not charged a paisa. But according to the RBI governor, this “free” model is currently running on government subsidies. These subsidies help banks and payment service providers cover the rising costs of maintaining the complex digital payment infrastructure behind the scenes.
“Someone Will Have to Pay” — RBI’s Candid Statement
Speaking at an event in Mumbai, Malhotra said something that made the future clear: “Costs will have to be borne — someone has to pay.” He emphasized that no service, especially one handling billions of transactions monthly, can remain completely free forever. This hints at the possible return of Merchant Discount Rates (MDR) — a charge that merchants used to pay but was abolished in 2019 to boost UPI adoption.
Experts Have Been Warning for Years
Many in the digital payment industry have long raised concerns about sustainability. The cost of maintaining secure servers, managing backend systems, and scaling up infrastructure is enormous. While UPI has seen explosive growth, with billions of transactions every month, there’s been no stable revenue model to support it.
UPI Is Breaking Records — But Can It Stay Free?
Just last month (June 2025), UPI set a global benchmark by processing 18.39 billion transactions, with a staggering total value of ₹24.03 lakh crore. It has even overtaken global giants like Visa in terms of volume. Yet, behind this success, there’s a growing worry: Can UPI continue to operate sustainably without charging users or merchants?
So, What Could Happen Next?
The RBI hasn’t yet clarified who will eventually bear the cost — users or merchants. But one thing is becoming more certain: the era of completely free UPI payments may be nearing its end.
Whether this shift will be gradual or sudden, it’s clear that India’s digital payments landscape is on the verge of a major transformation.