ICICI Bank To Start Charging Payment Aggregators for UPI Transactions From August 1; Escrow Account Holders To Pay Less, Non-ICICI PAs Face Higher Fees Amid Rising Infrastructure Costs
ICICI Bank will start charging payment aggregators for UPI transactions from August 1. Aggregators with ICICI escrow accounts will pay 2 bps per transaction (capped at INR 6), while others will be charged 4 bps (capped at INR 10). Merchants with ICICI accounts won’t be affected by the new fee.
New Delhi, July 31: Starting August 1, ICICI Bank will begin levying charges on payment aggregators (PAs) for processing Unified Payments Interface (UPI) transactions, marking a major shift in the digital payments ecosystem. According to sources, the bank will introduce a transaction handling fee aimed at covering the cost it bears to route UPI payments via the National Payments Corporation of India (NPCI).
Payment aggregators that maintain an escrow account with ICICI Bank will be charged 2 basis points (bps) per transaction, capped at INR 6. However, those without an ICICI-linked escrow account will face a 4 bps fee, with a cap of INR 10 per transaction. These charges will not apply to merchants who hold ICICI Bank accounts, as the fee is targeted solely at the intermediaries enabling UPI payments. Government To Levy Charges on UPI Payments Soon? Finance Ministry Rejects Reports of Fee on UPI Transactions.
This move comes amid growing concerns about the financial sustainability of UPI infrastructure. While the government mandates zero Merchant Discount Rate (MDR) for UPI payments, NPCI charges a switching fee to banks, which some are now passing on to aggregators. ICICI Bank joins peers like Yes Bank and Axis Bank, who have already introduced similar charges over the past year. UPI Charges From April 1: No Fees on Normal Unified Payments Interface; Interchange Fee Applicable for PPI Merchant Transactions, Clarifies NPCI.
The surge in UPI transactions has significantly increased the burden on backend systems managed by banks and service providers, prompting calls for a more viable revenue model. Industry insiders note that many PAs already charge merchants “platform” or “reconciliation” fees to recover costs.
The development, first reported by The Head And Tale, highlights rising operational costs for payment aggregators and signals potential pricing changes in merchant-facing UPI services in the near future.
(The above story first appeared on LatestLY on Jul 31, 2025 07:39 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).