The government’s clarification that consumers will not be charged for UPI transactions is welcome, especially as digital payments have become an integral part of everyday life in India. Any attempt to impose charges on ordinary person-to-person transactions would disproportionately affect consumers who have moved away from cash because of UPI’s simplicity, speed and zero-cost convenience. The government must therefore ensure that the promise of a free UPI for citizens remains sacrosanct.
At the same time, the debate over a possible merchant discount rate (MDR) cannot be dismissed outright. UPI processed a staggering 2,366 crore transactions worth Rs 29.9 lakh crore in July alone, underlining the enormous infrastructure, cybersecurity and fraud-prevention costs involved. A carefully designed, threshold-based and nominal MDR on a limited category of large-value merchant transactions could help create a more sustainable ecosystem, provided small traders, street vendors and ordinary businesses are protected. The principle should be simple: those who can afford to contribute to the system may do so, but UPI must not become a financial burden on India’s smallest businesses.
UPI is one of India’s most successful digital public infrastructure achievements and has become a global model for real-time payments. Its future should not depend indefinitely on government subsidies, but neither should sustainability come at the cost of its greatest strength — universal accessibility. The government and NPCI must ensure complete transparency on any future MDR, including who will pay, how much and where the money will go. UPI must remain free for citizens, affordable for small merchants and financially sustainable for the ecosystem.