No Plan To Levy Any Charge On UPI Payments: RBI Governor Sanjay Malhotra | Banking and Finance News

RBI Governor Sanjay Malhotra.

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday reiterated that the central bank has no proposal under consideration to impose any charges on Unified Payments Interface (UPI) transactions.

UPI has become a cornerstone of India’s digital economy, driving financial inclusion and transforming the way payments are made.

“There is no proposal to levy any charge on UPI transactions,” the RBI governor clarified, putting to rest market speculation around possible fees (or MDR) on the popular payment system.

UPI, launched in 2016, has witnessed exponential growth, crossing over 12 billion transactions in August 2025 alone, according to NPCI data. The platform has become the backbone of India’s retail digital payments, widely used for peer-to-peer transfers, merchant payments, and even cross-border transactions in some countries.

Currently, UPI services are provided to users free of cost. The government and RBI have repeatedly emphasised that the zero-charge framework has been a key factor in its success, encouraging both merchants and customers to adopt digital payments without hesitation.

The clarification by the Governor comes at a time when the RBI is actively working on strengthening digital payment infrastructure, expanding UPI’s global footprint, and exploring innovations such as UPI Lite and UPI for feature phones.

What Is MDR?

Merchant Discount Rate (MDR) is a fee that banks typically charge merchants for processing payments instantly. Previously, merchants paid an MDR fee of 1 per cent of the total transaction value on card payments. However, in 2020, the government waived these charges for debit cards to encourage digital transactions.

MDR is still applicable on most credit card transactions. Rates vary between 1% to 3% depending on the card type, transaction size, and merchant category.

Ramakrishnan Ramamurthy, chief delivery and operations officer – India, Worldline, said, “UPI’s performance in September 2025 reaffirms its position as the backbone of India’s digital payments ecosystem. Recording 19.63 billion transactions worth ₹24.90 lakh crore, the platform witnessed robust year-on-year growth of 31% in transaction volume and 21% in value.”

This sustained momentum highlights not only UPI’s deepening penetration across urban and rural India but also the increasing reliance of consumers and businesses on fast, secure, and low-cost digital payments. The consistent growth in both volume and value underscores UPI’s pivotal role in advancing financial inclusion, formalising the economy, and powering the country’s digital transformation, he added.

“Looking ahead, recent enhancements—such as increased transaction limits and the introduction of credit lines on UPI—are set to expand its reach into high-value payments and credit-driven use cases. These innovations are expected to further consolidate UPI’s dominance in the digital payments landscape and accelerate India’s shift towards a less-cash, tech-enabled financial future,” Ramamurthy said.

List of countries where international merchant payments are accepted at select merchant outlets:

NPCI International Payments Limited (NIPL) in partnership with Qatar National Bank has enabled the acceptance of QR code-based Unified Payments Interface (UPI) across Qatar via point-of-sale (POS) terminals for merchants acquired by QNB and powered by NETSTARS’ payment solution. This move will allow Indian travelers to carry out UPI payments seamlessly at major tourist attractions and Qatar Duty Free outlets, which is the first merchant to go live on UPI.