MUMBAI: RBI governor Sanjay Malhotra said consumers already bear the cost of UPI transactions through the broader economy even if merchant fees are not explicitly charged.Responding to questions at a press conference on enabling merchant fees on UPI, Malhotra said it was too early to take a view, and the focus remains on strengthening the payments infrastructure. “It is very premature right now. Now, costs have to be paid by someone — it’s a public [good]; we all want this particular infrastructure to continue to strengthen, become more efficient. That’s our focus as of now — let’s watch how developments proceed,” he said.
In the past, RBI officials have supported fees at least for large transactions. Govt has proposed amendments to the law that barred any form of merchant fees on UPI transactions. There have also been reports that the government plans to allow merchant fees to be charged on UPI transactions with a value of over Rs 2,000. The absence of fees has resulted in banks ceding the payments as a service space to fintechs, with the likes of PhonePe and Google Pay being an almost duopoly, using the transactions to draw more users to their platform, where they seek to earn revenue through distribution of many other services.Malhotra said the objective is to scale up UPI usage significantly and any decision on fees must consider its impact on adoption. “The goal is to have 800 million transactions a day or so. So, imposing a fee… let’s wait, it’s premature right now. But please keep in mind that ultimately it is the consumer, in some way or the other, who is already paying it — it may not be the same consumer; it may be the general economy, and you don’t get to see it directly, but it’s already happening in some form,” he said. He said the priority is to ensure sustained investment in UPI and the availability of revenue streams to support its growth.
