RBI flags UPI’s indirect costs as merchant-fee debate resurfaces
RBI Governor Sanjay Malhotra said consumers already bear UPI transaction costs indirectly, while calling merchant-fee decisions premature. The comments keep focus on potential fees for higher-value UPI payments, a possible cost and acceptance lever for retailers.
What happened
Reserve Bank of India · RBI Governor Sanjay Malhotra said UPI users indirectly bear transaction costs and called merchant-fee decisions premature. The RBI is
Key facts
- 800 million UPI transactions per day target
- Rs 2,000 proposed transaction threshold for merchant fees
Why this matters
Build fee-trigger and cost-sharing provisions into payment-partner negotiations, with particular focus on high-value UPI transaction volumes and merchant-acquisition economics.
What to watch
- RBI consultation paper, payment-system circular or Governor remarks specifying a transaction threshold, merchant category or MDR cap.
- Union Budget or Ministry of Finance decisions on UPI incentive/subsidy allocations and reimbursement of banks or payment providers.
- NPCI, bank and payment-aggregator changes to merchant pricing, onboarding terms or high-value transaction handling.
- Evidence of issuer/acquirer economics deteriorating, including reduced merchant incentives, new platform charges or slower UPI acceptance expansion.
- Merchant-industry lobbying from organised retail, jewellery, electronics, fuel, travel and e-commerce sectors.
- Changes in UPI transaction mix toward larger ticket sizes, which would increase the policy relevance of targeted fees.
- Model payment-cost exposure by UPI ticket band, category and store format; isolate high-value UPI share rather than total UPI share.
- Review acquiring and payment-aggregator contracts for MDR pass-through, pricing-change notice periods and multi-rail routing flexibility.
- Prepare customer-neutral tender steering plans for large tickets, including card EMI, bank transfer, BNPL and loyalty-funded incentives.
- Avoid pre-emptive UPI surcharges or acceptance restrictions; these could damage conversion and attract regulatory scrutiny before any formal framework is announced.
- Engage industry bodies on a threshold-based, capped MDR design that protects low-value transactions and small merchants.