The ‘zero-fee’ policy for UPI transactions should be continued for a few more years. Rajiv Kumar, former Vice Chairman of NITI Aayog, has warned that if even a nominal charge is imposed, users might revert to the cash-based era. Kumar stated that the government should not levy fees on merchants for UPI transactions.
According to him, UPI should be viewed as a ‘public good’ or a service in the public interest, as its benefits far outweigh the costs of maintaining its infrastructure. Rajiv Kumar noted that the benefits of the service exceed the ₹20,000 crore burden placed on the public exchequer to sustain the UPI infrastructure. He further stated that free UPI services should be continued for a few more years—specifically, until a decline in the currency-to-GDP ratio is observed.
Kumar added that, in terms of volume, 96% of UPI transactions are below ₹2,000. Conversely, in terms of value, approximately 66% of transactions exceed this threshold. The government’s decision could drive people back to cash transactions. Reports indicate that the government has announced the imposition of a 0.4% Merchant Discount Rate (MDR) on person-to-merchant UPI transactions exceeding ₹2,000, effective October 15. A cap of ₹300 has been set for transactions valued at ₹75,000 or more.
