ICICI Bank has introduced a new UPI transaction fee for payment aggregators (PAs), effective from August 1, 2024. This change affects popular payment platforms like Google Pay, PhonePe, MobiKwik, and Razorpay, which process UPI payments for merchants.
What Are the New ICICI Bank UPI Charges?
Payment aggregators act as middlemen between banks and merchants, handling payment settlements. Under the new ICICI Bank UPI charges:
For PAs with an ICICI Bank escrow account:
1.Fee: 2 basis points (0.02%) per transaction
2. Maximum charge: ₹6 per transaction
For PAs without an ICICI Bank escrow account:
- Fee: 4 basis points (0.04%) per transaction
- Maximum charge: ₹10 per transaction
Good news for merchants: If UPI payments are directly settled into an ICICI Bank account, no extra charges apply. This helps ICICI Bank retain funds temporarily, earning interest.
Why Is ICICI Bank Charging for UPI Transactions?
Rising UPI Transaction Costs – UPI payments have grown massively, especially in merchant transactions, increasing bank infrastructure expenses.
No Merchant Discount Rate (MDR) – Unlike credit/debit cards, UPI transactions don’t charge merchants, so banks earn little from them.
Following Other Banks – Private banks like Yes Bank and Axis Bank already charge PAs for UPI transactions.
Will ICICI Bank UPI Charges Affect Customers?
Customers will not pay extra—UPI remains free for users.
Merchants may see higher fees if payment aggregators pass on the cost.
Some PAs might absorb the charges, depending on agreements.
How UPI Payments Work with Payment Aggregators
When you pay via UPI on apps like Swiggy or Amazon:
The payment aggregator (PA) processes the transaction between your bank and the merchant’s bank.
Funds often go into an escrow account (a temporary holding account) before reaching the merchant.
If the escrow account is with ICICI Bank, the new UPI charges apply.
Final Thoughts
ICICI Bank’s new UPI transaction fees aim to recover costs while keeping UPI free for customers. Merchants might face slightly higher charges, but the impact on users should be minimal.
Will this change affect how you use UPI? Let us know in the comments!
