Former Reserve Bank of India (RBI) Governor D. Subbarao has started a new debate about UPI (Unified Payments Interface) fees. While speaking at the launch of a new book titled 'Cashless Nation', he argued that UPI is free for users but not 'costless' to run. He believes the time has come to charge for these services because maintaining the huge digital payment system requires real money and infrastructure.

Currently, the government and RBI keep UPI transactions free for customers and merchants to encourage digital growth. However, Subbarao pointed out that someone must bear the cost of this technology. If the users do not pay directly, banks have to find the money elsewhere. This usually means banks might offer lower interest rates on Fixed Deposits (FDs) or charge more interest on loans to cover their expenses.

For bank officers, this is a major talking point. Subbarao mentioned that if banks do not earn from UPI, they will have less incentive to innovate or upgrade their IT systems. He suggested a 'calibrated approach' to start charging. This means the government could first introduce fees only for high-value transactions instead of charging for small daily payments made by poor people.

He addressed the worry that fees might push people back to using cash. While he understands that small vendors in the informal sector might leave the digital platform if it becomes expensive, he still maintains that 'the user should pay' for the service they get. This would ensure the financial system remains healthy and sustainable in the long run.

Beyond just fees, the former Governor spoke about the gender gap in digital payments. Even though many women have Jan Dhan accounts (zero-balance savings accounts), they perform less than 25% of all UPI transactions. He noted that even if women own mobile phones, they often lack the confidence or privacy to use UPI apps independently. This shows that opening accounts is not enough for true financial inclusion.

Subbarao also highlighted the 'credit gap' (the difference between how much money people need and what banks actually lend). He stated that true financial inclusion means providing loans, not just money transfers. He urged banks to use Data and Artificial Intelligence (AI) to check if a borrower can repay a loan. This would help small businesses get long-term investment credit instead of just small daily working capital.

He credited the 'JAM Trinity'—Jan Dhan, Aadhaar, and Mobile phones—for the current success of Indian payments. He said that while each piece was important, their arrival at the same time created the big breakthrough we see today. However, for the next phase of growth, he believes the industry must solve the issues of pricing and credit access.

Bankers and customers should watch for any official signals from the RBI or Finance Ministry regarding a 'merchant discount rate' (MDR) or user fees on UPI. While the government has been hesitant to charge for UPI so far, the push from former top officials suggests that the 'free era' might eventually face changes for high-value users.