India’s most beloved payment system, UPI, might not stay free forever. That’s the latest takeaway from RBI Governor Sanjay Malhotra, who on Wednesday hinted that the era of zero-cost digital transactions could be nearing its end.
Someone Has to Bear the Cost
At the post-Monetary Policy Committee (MPC) press conference, Malhotra clarified his previous comments, saying:
“I never said that UPI can stay free forever. What I said was there are costs, and they need to be paid by someone.”
He emphasized that the question isn't just who pays—it's that someone has to pay for the system’s sustainability. The infrastructure, technology, servers, and security that power UPI transactions come at a cost. For now, these costs are largely subsidized or absorbed by financial institutions and the government.
But for how long?
ICICI Bank Starts Charging Payment Aggregators
RBI Governor’s remarks come at a time when the first signs of UPI monetization are already appearing.
According to an Economic Times report, ICICI Bank has started levying charges on Payment Aggregators (PAs) for handling UPI transactions, effective August 1, 2025.
Here’s what the new structure looks like:
- PAs with ICICI escrow accounts are charged 2 basis points (₹0.02 per ₹100), capped at ₹6 per transaction.
- Without escrow at ICICI, the charge rises to 4 basis points, capped at ₹10.
- Merchants using ICICI directly will not face these charges—at least for now.
Though ICICI hasn’t made an official comment, sources confirm the new fee structure was communicated to aggregators in June.
The Beginning of the End for Free UPI?
This move by ICICI, coupled with the RBI’s statement, is sparking widespread speculation: Is this the beginning of a slow shift toward monetizing UPI?
Malhotra had already flagged these sustainability concerns earlier in July at the Financial Express BFSI Summit, noting that maintaining a zero-cost model indefinitely may not be viable.
India’s UPI handles over 11 billion transactions every month, making it a global digital payments powerhouse. But as usage surges, so do the costs, raising pressing questions about who should fund its future.
