RBI Governor Mr. Sanjay Malhotra recently said that someone has to pay for the cost of UPI.The discussion has been going on for quite some years now. There is no doubt that there is a huge IT infrastructure behind the seemingly simple UPI transaction. Not just that, there is also a large security layer that has to remain on the edge constantly. The argument has been that to keep this kind of innovation going, there has to be some sort of fee associated with it. The bone of contention has always been simple: who should bear the cost of UPI?

The Government, keen on making the transition from cash to digital payments, has been absorbing a significant part of these costs and supporting the ecosystem. In this background, the Taxation and Other Laws (Amendment) Bill, 2026 has been introduced. The legislation creates a framework that could allow charges to be levied on certain categories of UPI transactions.

The general market perception is that certain high-value transactions, particularly those above ₹2,000, could be charged. These account for only a small proportion of total UPI transactions. P2P UPI transactions, however, are expected to remain untouched for now.

To put things in perspective, such charges would not be entirely unusual. We already pay for certain banking services such as NEFT, IMPS transfers or Demand Drafts. But I am not entirely convinced.

The Government has actively pushed India towards a digital payments economy. UPI was not merely allowed to grow organically. It was deliberately promoted as a public digital infrastructure that could reduce India's dependence on cash and make payments faster, cheaper and more transparent.

And it has worked.

Today, UPI is deeply embedded in our economy. From a small roadside vendor to a large enterprise, digital payments have become part of everyday commerce. But that also brings us back to the original question.

Cash transactions & Distribution infrastructure

Physical cash also has a significant cost. Currency has to be printed, transported, stored, distributed, collected and eventually replaced. There is an entire physical infrastructure behind the cash that we rarely think about. The cost is ultimately borne by the RBI and in different ways by the institutions that handle cash.

Over time, some of these costs have also found their way to customers. What was once considered a basic banking service has gradually acquired charges for certain forms of handling and logistics.

I know this is an indirect reference because the physical cash equivalent is the e-Rupee. But having said that, the underlying infrastructure in terms of distribution, circulation and collection is partly comparable to the IT infra used for digital transactions. 

Convenience or Forced convenience? 

Digital payments are certainly convenient. And I am willing to pay for convenience. But convenience as a choice is different and forced convenience is different. The push for digital was kind of forced, with indirect restrictions being made on cash movement. I perfectly understand the huge economic benefits that would accrue due to this transition from cash to digital. But there is a larger policy question here. If the Government deliberately encouraged citizens and businesses to move from cash to digital payments, and if that transition serves a larger economic objective, should the cost of maintaining that digital infrastructure eventually be pushed back to the users?

This is not an argument against charging for services. It is an argument about who should bear the cost of a policy-led transition.

UPI has been one of India's greatest digital success stories. It has reduced friction, enabled small businesses to accept digital payments, brought millions of people into the formal financial system and changed the way India transacts. In this context, it is only fair that the Government bears the cost. Yes, it has been doing it so far. Perhaps it would be better that it openly acknowledges it and puts the amendment on the back burner. 

While there is a cost to maintaining this infrastructure and keep innovating, the simple question is, why should it be you and me?