Small UPI Charge Could Make Digital Payments Self-Sustaining: NITI Aayog VC

NITI Aayog Vice Chairman Ashok Kumar Lahiri on Wednesday said a small charge on certain UPI transactions could help make the digital payments ecosystem self-sustaining, while keeping the levy as low as possible to avoid hurting consumers. Lahiri said the “user-pays principle” should be considered for UPI, arguing that businesses also benefit significantly from digital payments as they avoid the costs and inconvenience associated with depositing cheques and handling cash.

“Try to make it as little as possible, but please levy it so that UPI becomes a self-sustaining business,” Lahiri said when asked whether charging for UPI payments above Rs 2,000 could affect digital payment adoption in India. BillDesk Director and Co-founder Srinivasu MN said UPI has become a lifeline for consumers in their daily payments, supported by significant investments from banks, financial institutions and the broader payments ecosystem.

He said India has crossed 500 million UPI users, and further investment would be necessary in technologies such as fraud protection and customer education as the system expands. Srinivasu clarified that the proposed UPI charge would not apply to consumers or small-value merchant transactions. According to him, the levy would apply only to a limited set of transactions above Rs 2,000, with concessional charges for certain routine payments such as utility bills, government tax payments, insurance and fuel bills.

He also said that a portion of the merchant discount rate (MDR) could be allocated to a dedicated fund aimed at supporting the expansion of UPI transactions, particularly among small merchants. Lahiri also stressed that Indian businesses should themselves identify viable markets as the country seeks to diversify exports amid uncertainty in major markets such as the US. He said the private sector should determine where Indian products can find demand rather than relying on the government to prescribe specific markets.

“The world is large,” Lahiri said, pointing to opportunities across Africa, Latin America, East Asia and Australia, while noting that he did not have a specific answer on which markets businesses should target. Srinivasu said India is already a global leader in retail digital payments, accounting for more than half of the world's retail digital transactions. However, he noted that UPI currently reaches around 500 million users, leaving considerable scope for further expansion.

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