Mumbai | Governor Sanjay Malhotra on Friday said the Reserve Bank of India will find ways to make the popular payments platform UPI sustainable for stakeholders and also to ensure infrastructure improvements in it.
"We will certainly be able to find out a way not only to sustain, but to improve this very important payment infrastructure, which is so very unique in our country over the years," Malhotra told reporters here after the announcement of the February monetary policy.
He added that this will help address concerns over the payment infrastructure from a customer's point of view.
At present, unified payments interface (UPI) is virtually free for all users, and banks are compensated by the government for executing the transactions through budgetary support, because a shift to the digital alternatives helps in reducing the cash usage in the economy.
The ecosystem has been pressing for being allowed to charge a merchant discount rate (MDR), on the lines of a similar levy which exists for credit card usage, underlining that the platform needs to be sustainable. However, the government has not accepted the demand given the sensitivities as UPI boasts of around 500 million users.
In Union Budget for 2026-27, the government has allocated Rs 2,000 crore as incentive to promote low-value, peer-to-merchant (P2M) UPI and RuPay debit card transactions, even as such payments continue to carry zero merchant discount rate (MDR). This amount is lower than the Rs 2,196 crore it is spending in the ongoing FY26, as per revised estimates. The amount allocated for FY26 in the budget was Rs 437 crore.
Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant) is a provision for payment of incentive to acquirer banks which they share with issuer Banks, Payment Service Providers (PSPs) and third party App Providers (TRAPs), as per budget document.
A similar view was stressed by the Governor in July 2025 during an event in Mumbai that there is a need to make the UPI system financially sustainable.
The government on Tuesday informed the Rajya Sabha that transactions through UPI touched a record value of Rs 230 lakh crore in the current financial year till December.
