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RBI Governor Sanjay Malhotra made it clear on August 6 that the system behind UPI cannot remain free forever. While presenting the monetary policy in August, he said that the real issue is to decide who is paying the cost of UPI payments.
UPI is being used for every purchase, big or small. If you don’t have money in your pocket but have a mobile phone, then you don’t need to worry. Payments for everything from vegetables to luxury items are being made using UPI. The biggest thing is that it is free. This means that you don’t have to pay any fee for making payments through it. The question is, will it no longer be free?
UPI cannot be free forever
RBI Governor Sanjay Malhotra made it clear on August 6 that the system behind UPI cannot remain free forever. While presenting the August monetary policy, he said that the real issue is to decide who is paying the cost of UPI payments. He said that the government has to take a decision in this regard.
Businesses currently bear the burden of MDR
He said, “I never said that it (UPI) will always remain free. He said this in response to a question related to Merchant Discount Rate (MDR) or such charges.” He was asked whether the burden of MDR can be put on the customers? First it is important to know about MDR. This is the fee that is levied by payment processing companies on shops or other businesses that accept payments through credit or debit cards.
Someone is paying the cost of UPI
Clarifying the situation, Malhotra said that I believe that this (UPI) cannot remain free forever. He said, “Someone is bearing the cost of this. The government is giving subsidy. But, somewhere the cost is being paid.” He said that he never said that the user will have to pay this cost. Instead, he seemed to be in sync with the government’s stance in this matter. Actually, the Finance Ministry has to take a decision on the issue of pricing and subsidy in this matter.
The use of UPI may be affected due to the fee
The RBI governor’s comments come at a time when reports have emerged that some banks have started charging for UPI payments routed through payment aggregators. Experts believe that if fees are levied on UPI transactions, its usage may be affected.
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