The Unified Payments Interface (UPI) has become the backbone of India’s digital economy, enabling over 60 crore transactions daily across businesses, consumers, and even street vendors.
With zero fees under the government's zero Merchant Discount Rate (MDR) policy, UPI has driven massive adoption.
However, RBI Governor Sanjay Malhotra recently flagged concerns over the long-term financial sustainability of this model.
Speaking at an event, RBI Governor Sanjay Malhotra emphasized that while digital payments are vital, the infrastructure isn’t cost-free.
Currently, the government subsidizes banks, payment providers, and NPCI to keep UPI free.
As usage surges, maintaining quality infrastructure without revenue, strains the system and limits innovation, particularly for smaller fintech players.
Although no immediate change was announced, Malhotra hinted that the zero MDR policy, governed by the central government, may face a review.
Potential future models could include nominal charges or tiered pricing to ensure viability.
Meanwhile, UPI’s global footprint is expanding, with countries like Singapore and France exploring its integration.
As India seeks to export its fintech prowess, ensuring UPI’s financial health will be critical.
The challenge ahead lies in balancing affordability with a revenue model that sustains growth, scale, and innovation.
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