The case for pricing UPI transactions and what's at stake for banks

Banks pay a switching fee running into hundreds of crores every year for UPI, but have to offer the service for free

Last Sunday, the finance ministry tweeted that UPI (Unified Public Interface) is a digital public good with immense convenience for the public and productivity gains for the economy. And, therefore, “there is no consideration in the government to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means”, it said.

The ministry’s stance came days after Mint Road came out with a “Discussion Paper on Charges in Payment Systems” broadly making the case for a transaction fee for these services.

“In any economic activity, including payment systems,