UPI's Zero-Fee Model Faces Sustainability Questions as Costs Mount

India's Unified Payments Interface (UPI) revolutionized digital transactions by offering completely free payments, enabling mass adoption across the country. The platform's success has been built on its zero-charge model, particularly for small-value transactions. However, the infrastructure supporting billions of UPI transactions comes at a significant financial cost, estimated in the tens of thousands of crores of rupees. This raises a pressing question about how long the free UPI model can remain financially viable for banks and payment service providers. Stakeholders are now debating whether a fee structure may eventually need to be introduced to sustain the system.
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