UPI Stays Free? ₹18,000Cr Debate May Change That

A new report says UPI payments cost banks and fintechs ₹18,000 crore a year to run. If the government stops covering these costs, companies may find indirect ways to charge you — even though a direct surcharge is currently banned.

Here's what happened: An IIT Bombay report estimates that UPI's annual infrastructure and operational cost to payment providers is approximately ₹18,000 crore, with no direct revenue model currently in place.. India bans UPI surcharges on customers and merchants, but the report flags that this zero-MDR policy is financially unsustainable for banks and payment aggregators in the long run.. The report recommends policy tweaks to create a fair revenue framework for payment providers — while warning that poorly designed MDR could erode public trust in UPI..

What you should do: Check your payment app's fee schedule today — some platforms already levy 'convenience fees' on wallet top-ups, credit card UPI payments, and utility bill payments.. Avoid linking a credit card to UPI for routine small purchases — credit-card-on-UPI transactions already attract up to 1.8% MDR in some cases, which merchants can pass on to you.. Compare UPI-linked savings account benefits across banks — some offer cashback or zero forex fees that partially offset any future cost creep on digital payments..

Credit card UPI payments (via RuPay credit cards) are currently MDR-exempt at many merchants — but this carve-out is under review. Use it while it lasts for big-ticket purchases.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.