{"id":38094,"date":"2025-08-01T12:17:19","date_gmt":"2025-08-01T06:47:19","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=38094"},"modified":"2025-08-01T12:18:06","modified_gmt":"2025-08-01T06:48:06","slug":"what-happens-if-upi-isnt-free-anymore","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/what-happens-if-upi-isnt-free-anymore\/","title":{"rendered":"What Happens If UPI Isn\u2019t Free Anymore"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">There\u2019s something special about every UPI payment you make at every cafe, chai stall, your favourite momos place, and paan shop in India. Not only is it convenient, but UPI shows inclusion. It has made payments digital and instant. Not to forget free, but for how long?<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b><img loading=\"lazy\" class=\"alignnone wp-image-37250 size-full\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/sip-01.png\" alt=\"SIP_Kuvera\" width=\"600\" height=\"150\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/sip-01.png 600w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/sip-01-300x75.png 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/sip-01-150x38.png 150w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/b><\/h4>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">To understand what\u2019s at stake, we need to know some basic economics. Goods are majorly classified by two traits:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Excludability<\/b><span style=\"font-weight: 400;\"> (can people be kept out)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Rivalry<\/b><span style=\"font-weight: 400;\"> (does one person\u2019s use reduce another\u2019s)<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Based on these, we get four kinds of goods:<\/span><\/p>\n<p>&nbsp;<\/p>\n\n<table id=\"tablepress-5332\" class=\"tablepress tablepress-id-5332\">\n<thead>\n<tr class=\"row-1\">\n\t<th class=\"column-1\">Types of Economic Goods<\/th><th class=\"column-2\">Rivalrous<\/th><th class=\"column-3\">Excludable<\/th><th class=\"column-4\">For example<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr class=\"row-2\">\n\t<td class=\"column-1\">Private goods<\/td><td class=\"column-2\">Yes<\/td><td class=\"column-3\">Yes<\/td><td class=\"column-4\">A cup of chai<\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td class=\"column-1\">Club goods<\/td><td class=\"column-2\">No<\/td><td class=\"column-3\">Yes<\/td><td class=\"column-4\">Netflix<\/td>\n<\/tr>\n<tr class=\"row-4\">\n\t<td class=\"column-1\">Common pool goods<\/td><td class=\"column-2\">Yes<\/td><td class=\"column-3\">No<\/td><td class=\"column-4\">Fish in the ocean<\/td>\n<\/tr>\n<tr class=\"row-5\">\n\t<td class=\"column-1\">Public goods<\/td><td class=\"column-2\">No<\/td><td class=\"column-3\">No<\/td><td class=\"column-4\">Streetlights<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<!-- #tablepress-5332 from cache -->\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">For the past five years, UPI has behaved like a public good. It\u2019s free and frictionless. It is available to anyone with a bank account and a mobile phone. This wasn\u2019t always the case. Until 2019, banks charged merchants a fee, i.e., 0.25% for transactions under \u20b92,000, and 0.65% for larger ones.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The government\u2019s decision to scrap these fees in December 2019 changed everything. Usage exploded 14x in five years. Last month alone saw 1,840 crore transactions worth \u20b924 lakh crore. But now, there\u2019s uncertainty in the air.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">RBI\u2019s governor recently stated, \u201cSome costs have to be paid whether collectively or by the user.\u201d Though the finance ministry quickly dismissed the idea of bringing back merchant discount rates (MDR), the conversation has begun.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Banks argue that UPI hurts their bottom line. But they\u2019ve already been compensated. They charge 15 paise per \u20b9100 for small-ticket UPI payments. And the number of participating banks has increased from 143 to 675 post-MDR removal. Why? Because UPI isn\u2019t just a transaction medium. It can be used as a customer acquisition funnel for lending, insurance, and even cross-selling.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><img loading=\"lazy\" class=\"alignnone wp-image-37226 size-large\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-1024x256.png\" alt=\"FD_Kuvera\" width=\"640\" height=\"160\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-1024x256.png 1024w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-300x75.png 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-768x192.png 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-1536x384.png 1536w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-2048x512.png 2048w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2025\/05\/FD-Banner-9.0-01-150x38.png 150w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/h4>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Reintroducing MDR risks more than a few paise lost per swipe. By reducing merchant acceptance, increasing cash usage (already at \u20b937 lakh crore), and inflating printing costs (\u20b96,373 crore last fiscal), this could tilt the entire system backwards.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">In short, UPI works because it behaves like a public good. Change that, and you risk turning a digital utility into a digital luxury.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Interested in how we think about the markets?<\/strong><\/p>\n<p>Read more:&nbsp;<a href=\"https:\/\/kuvera.in\/blog\/in-investing-the-simplest-things-are-the-hardest\/\">Zen And The Art Of Investing<\/a><\/p>\n<p><strong>Watch here:&nbsp;<\/strong>Investing in Passive Funds<\/p>\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\"><iframe src=\"https:\/\/www.youtube.com\/embed\/qR6zzb2MtTg?si=lNSS7dosAelPg04S\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit&nbsp;<a href=\"https:\/\/www.youtube.com\/watch?v=R7g03UwJAT8&amp;utm_source=Blog&amp;utm_medium=Weekly+wrap+22nd+July\" target=\"_blank\" rel=\"noopener\">kuvera.in<\/a> to discover Direct Plans of Mutual Funds and <a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a>&nbsp;and start investing today.<\/p>\n<p>&nbsp;<\/p>\n<p><em>AREVUK Advisory Services Pvt Ltd | SEBI Registration No. INA200005166<\/em><br \/>\n<em>DISCLAIMER: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. The securities quoted are for illustration only and are not recommendatory.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>There\u2019s something special about every UPI payment you make at every cafe, chai stall, your favourite momos place, and paan shop in India. Not only is it convenient, but UPI shows inclusion. It has made payments digital and instant. Not to forget free, but for how long? &nbsp; &nbsp; To understand what\u2019s at stake, we [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/what-happens-if-upi-isnt-free-anymore\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":38103,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[593],"tags":[4128,4127,4126,4129,2233],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Happens If UPI Isn\u2019t Free Anymore<\/title>\n<meta name=\"description\" content=\"There\u2019s something special about every UPI payment you make at every cafe, chai stall, your favourite momos place, and paan shop in India...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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