ICICI Bank will soon begin charging transaction fees on UPI payments made through payment aggregators (PAs).
This new rule is expected to take effect from August 1, 2025. Previously, Yes Bank and Axis Bank had already introduced similar charges.
How Much Will the Charges Be?
If a payment aggregator has an escrow account with ICICI Bank, a fee of 2 basis points (0.02%) will be applied on every UPI transaction. The maximum fee in this case will be Rs 6 per transaction.
If the PA does not have an escrow account with ICICI, the fee will be 4 basis points (0.04%), with a maximum charge of Rs 10 per transaction.
Who Won’t Be Charged?
No fees will be applied if the UPI transaction is settled directly into a merchant’s ICICI Bank account.
Other Banks Are Already Charging
This is not a new practice. Yes Bank and Axis Bank have been charging PAs for UPI transactions for the past 8 to 10 months.
Why Are These Charges Being Introduced?
Even though the government has kept the Merchant Discount Rate (MDR) on UPI at zero, banks still have to pay a switching fee to the National Payments Corporation of India (NPCI).
Some banks are now passing this cost on to payment aggregators to recover their expenses.
How Will This Affect Merchants?
Payment aggregators often charge merchants for services like platform usage and payment settlement reports.
With the new charges from ICICI Bank, there is a possibility that these costs may be passed on to merchants in the future.
Even though UPI remains free for customers, banks are gradually shifting toward recovering operational costs by charging intermediaries like payment aggregators.
