Mumbai, 5 Aug

RBI Governor Sanjay Malhotra on Wednesday said someone would have to bear the cost of operating the UPI payment infrastructure, but stressed that it was too early to determine who would ultimately pay if charges are introduced.

His comments come amid a proposal to allow a Merchant Discount Rate (MDR) on select UPI transactions above ₹2,000, particularly those involving large businesses.

Speaking at a press conference, Malhotra said the proposed changes could help ensure the financial sustainability of the UPI ecosystem, while adding that further developments on the issue needed to be watched.

The government has proposed amendments to the Payment and Settlement Systems Act, 2007, through the Taxation and Other Laws (Amendment) Bill, 2026. The changes could enable merchant charges on select UPI transactions in the future.

Sources said high-value UPI payments above ₹2,000 made to large businesses could be among the first transactions to attract MDR if the proposal is implemented. The charge is expected to be borne by merchants rather than directly by consumers.

There is currently no fixed timeline, final decision or detailed framework for implementing the proposed charges, sources said. Transactions above ₹2,000 are estimated to account for around 5% of UPI transactions but nearly 65% of their total value. Routine low-value payments, such as purchases of milk, vegetables and groceries, as well as auto-rickshaw and taxi payments, are not expected to be covered.

UPI recorded 23.66 billion transactions worth around ₹29.9 lakh crore in July, according to data from the National Payments Corporation of India (NPCI).

MDR is already applicable to certain card-based payments, with rates varying by card type. RBI has prescribed caps for eligible debit-card transactions, while RuPay debit-card transactions carry zero MDR under the government’s prescribed electronic-payment framework. Credit-card MDR is generally determined through arrangements involving card networks, issuers, acquirers and merchants