Government rethinks Indian UPI funding after parliamentary panel flags shortfall
The government is rethinking how to fund UPI, India's go-to digital payments system, after a parliamentary panel pointed out a huge gap: only ₹2,000 crore in subsidies versus ₹20,700 crore in estimated operational costs to keep it running.
With UPI handling billions of transactions every month, officials want to make sure it stays reliable and secure as it grows.
MDR fees and tiered subsidies considered
Two main ideas are on the table: bringing back Merchant Discount Rate (MDR) fees for high-value payments and phasing out subsidies for smaller transactions through a tiered system.
The goal is to keep UPI sustainable without putting too much strain on payment service providers.
Lawmakers stress that action is urgent so the platform can keep up with security needs, critical investments in cybersecurity, fraud prevention, and network infrastructure.