Former RBI Official Urges Stable UPI Revenue Model, Backs MDR on High-Value Transactions

New Delhi – In a recent interview, a former Reserve Bank of India (RBI) official highlighted the need for a long‑term revenue framework for the Unified Payments Interface (UPI). The official argued that while UPI has driven digital payments growth, its current zero‑fee structure is not financially sustainable for the ecosystem.

The former regulator suggested that applying a merchant discount rate (MDR) on transactions above a certain value could generate needed funds without hurting everyday users. He noted that high‑value payments constitute a small share of total volume, so a targeted MDR would have limited impact on consumers while supporting banks and payment service providers.

Industry observers have long debated how to monetize UPI without compromising its inclusive ethos. The RBI’s past discussions on MDR have stalled, but the former official’s remarks may revive policy talks as the platform continues to handle billions of rupees daily.

If implemented, the move could create a steady revenue stream for banks, enable further innovation, and ensure UPI’s scalability in the coming years.