Mumbai: Reserve Bank of India Governor Sanjay Malhotra said the cost of running India’s digital payment infrastructure must be paid by someone. However, he added that ordinary consumers may not necessarily have to bear this cost.
Malhotra was responding to a question on whether the RBI plans to introduce a merchant discount rate (MDR), or commission, on Unified Payments Interface (UPI) transactions.
Proposal Still Early
“It is very premature to say something on it. Let’s wait and watch for the development,” Malhotra said at a press conference on Wednesday.
He added that consumers ultimately pay the cost of services, but the burden may not fall on general consumers making regular UPI payments.
Last month, the RBI Governor had said that the cost of maintaining digital payment infrastructure must be covered. However, there is currently no formal proposal to charge everyday UPI users.
What May Change?
The Finance Ministry has reportedly proposed changes to the Payment and Settlement Systems Act. These changes could give the government more flexibility to allow merchant charges on certain digital transactions in the future.
High-value UPI payments above Rs 2,000 could potentially attract MDR. However, regular payments made by consumers are expected to remain free, according to senior government officials.
Officials said that more than 90 percent of transactions, including daily purchases of milk, vegetables and groceries, would not attract an MDR charge.
Existing Rules
At present, banks and payment service providers cannot levy charges on notified payment modes such as UPI and RuPay debit cards.
The proposed amendment to Section 10A of the Act would remove the fixed zero-charge rule. It would allow the government to decide which digital payment methods should remain free and which could attract charges.
The Bill introduced in the Lok Sabha only changes the legal framework. It does not immediately impose MDR on UPI payments.
Debit and credit card payments already attract MDR, which is generally paid by merchants. Most businesses do not directly pass this charge on to customers.
For now, the RBI has made it clear that any decision on UPI charges is still at an early stage.
