RBI : RBI's master plan for UPI; Technical improvements to prevent cyber fraud

The Reserve Bank of India (RBI) has made an important decision regarding the Unified Payments Interface (UPI), the most widely used digital payment system in the country. Considering the increasing load of digital transactions, incidents of cyber fraud, and future needs, a decision has been made to significantly improve the technical infrastructure of UPI. RBI Governor Sanjay Malhotra emphasized making the UPI ecosystem stronger, safer, and more sustainable while providing this information.

While interacting with the media after announcing the monetary policy for the month of February, Governor Malhotra stated that UPI is not just a payment system for India but the backbone of the digital economy. The number of citizens and merchants using UPI is increasing significantly day by day, making it essential to enhance the stability, speed, and security of the system.

Currently, UPI transactions sometimes face issues like server downtime, transaction failures, or delays. As the number of transactions is expected to increase in the future, RBI has clarified that building robust technical infrastructure to address these challenges is the need of the hour. Implementing these improvements will reduce the technical difficulties faced by customers during transactions and make the system more reliable.

The increasing incidents of cyber fraud are also a matter of concern for the RBI. Fraudsters have become active by exploiting security loopholes in UPI transactions. Therefore, the RBI will focus on enhancing data security, transaction authentication, and real-time monitoring systems. It is believed that if these fundamental improvements are made, the incidence of cyber fraud will significantly decrease in the future.

Meanwhile, UPI is currently almost free for citizens and merchants. The costs incurred by banks and payment apps are covered by government subsidies. However, there has been a long-standing demand from payment companies to implement the Merchant Discount Rate (MDR). Considering the sensitivity of approximately 500 million users, the government has decided not to implement MDR at present. In the Union Budget for 2026-27, the government has allocated 2000 crore rupees to promote UPI and RuPay debit card transactions.

This grant will be given to banks and third-party apps to accelerate digital transactions. Information has emerged that more than 230 lakh crore rupees worth of UPI transactions have taken place in the current financial year by December 2025. Overall, this decision by the RBI is considered extremely important for India's digital future. The ultimate goal of the RBI is to provide a secure, fast, and transparent digital payment system to every citizen.