MUMBAI: State Bank of India chairman CS Setty on Friday said it is not possible to quantify the increase in operating costs due to UPI causing a higher volume of transactions to hit the bank’s IT systems, even as debate intensifies over introducing charges on UPI merchant payments.Setty said bank apps have a low share in the payments space because they “completely missed the bus” on payments and it was too late to regain lost ground. He was responding to a question on whether additional operating costs borne by banks could be identified amid discussions on charging merchants for UPI transactions.“On the cost side, we cannot quantify specifically because most of the infrastructure is also a shared infrastructure. You can’t assign that this is a cost which is happening on the UPI,” said Setty.He said the bank is attempting to shift its customers to its Yono app for UPI payments and is seeing traction, but this remains far behind market leaders Google Pay and PhonePe. On the impact of likely merchant fees on UPI, Setty said that there was only an enabling provision. “We have to see the fine print and whether the govt exercises the enablers that are there.”According to NPCI data, State Bank of India recorded 631.6 crore UPI transactions in June 2026. Of these, only 2.3 crore transactions were carried out through its own apps.Govt is planning legal changes to facilitate UPI charges, focusing on merchant payments above Rs 2,000 to fund infra build-out and customer acquisition. Fintechs say UPI isn’t costless: rising core-banking load, NPCI network spend, security upgrades, and SMS alerts stretch providers, who now shoulder these costs.According to Amrish Rau, CEO at Pine Labs, Parliament has moved to amend the Payment & Settlement Act to enable some form of MDR while keeping consumer payments free. He added that “both Brazil’s PIX and China’s real-time payment systems have always had merchant charges of 30-40bps. Yet both have achieved over 90% penetration across users and merchants.”Rau said UPI processes nearly 23 billion interoperable payment transactions every month, and costs across IT, innovation and cyber security have risen by almost 300% over the last 12-24 months, , adding that P2P transactions and charges to consumers should remain zero.“Based on current discussions, we expect UPI MDR to be in the range of 0.05–0.07%, and RuPay debit card MDR at around 0.15–0.2%, applicable only to large merchants,” said Mehul Mistry, SVP, Zeta.
