CALCULATE YOUR SIP RETURNS

ICICI Bank Revises UPI Fees for Payment Aggregators; No Charges for Direct Merchant Settlements

Written by: Team Angel OneUpdated on: 4 Aug 2025, 9:50 pm IST
ICICI Bank revises UPI transaction charges for payment aggregators like Google Pay and PhonePe; no charges if settled directly into the merchant’s ICICI Bank account.
ICICI Bank Revises UPI Fees for Payment Aggregators; No Charges for Direct Merchant Settlements
ShareShare on 1Share on 2Share on 3Share on 4Share on 5

ICICI Bank has rolled out a revised fee structure for Unified Payments Interface (UPI) transactions processed by payment aggregators on merchant platforms. Effective from August 1, this change will affect key players such as Google Pay, PhonePe, Mobikwik, and Razorpay. 

However, transactions directly settled into a merchant’s ICICI Bank account will not attract any charges under the new policy.

ICICI Bank’s Revised Charges for Payment Aggregators

Payment aggregators function as intermediaries connecting merchants and banks by managing payment collections and settlements. Under the new structure announced by ICICI Bank, a differential fee applies based on the presence of an escrow account with the bank.

For those maintaining an escrow account with ICICI Bank, a charge of 2 basis points per transaction will apply, with a maximum cap of ₹6. Payment aggregators without an escrow account at ICICI Bank will be charged 4 basis points per transaction, with the fee capped at ₹10.

UPI Transactions Settled Directly into ICICI Bank Accounts

As reported by Hindustan Times, no charges will be levied if UPI payments are settled directly into a merchant’s ICICI Bank account. This arrangement allows the bank to retain transaction funds temporarily, offering potential advantages in terms of float income. As per media reports, this policy incentivises merchants to prefer ICICI Bank accounts for direct settlements.

Role of Payment Aggregators in UPI Transactions

When customers pay via UPI on merchant platforms, the payment aggregator routes the transaction between the customer’s bank and the merchant’s bank. Typically, the payment first enters an escrow account managed by the aggregator before being forwarded to the merchant’s account. This intermediary process provides settlement assurance and regulatory compliance.

Possible Implications for Merchants and Customers

The revised fee structure could have a downstream impact on merchants. Payment aggregators might choose to absorb the additional charges or pass them on to merchants, depending on the terms of their partnerships. Presently, customers do not bear any direct costs for UPI payments, and this is expected to remain unchanged under the new policy.

Merchants using UPI payment options through these platforms may witness a shift in pricing strategies, as aggregators adjust to the increased transaction costs. The extent of impact will likely vary based on the platform, agreement type, and volume of transactions.

Read More: Capgemini India Plans to Hire Up to 45,000 Employees in 2025

Growing Trend Among Private Sector Banks

ICICI Bank is not alone in implementing charges on payment aggregators. Private sector counterparts like Yes Bank and Axis Bank have already introduced similar fee structures for UPI-based transactions.

Conclusion 

This move indicates an evolving approach among banks to monetise the infrastructure supporting UPI, which has so far largely operated without transaction-based revenue from customers or merchants.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities are subject to market risks. Read all related documents carefully before investing.

Published on: Aug 4, 2025, 2:48 PM IST

Team Angel One

Team Angel One is a group of experienced financial writers that deliver insightful articles on the stock market, IPO, economy, personal finance, commodities and related categories.

Know More

We're Live on WhatsApp! Join our channel for market insights & updates

Open Free Demat Account!

Join our 3 Cr+ happy customers

+91
Enjoy Zero Brokerage on Equity Delivery
4.4 Cr+DOWNLOADS
Enjoy ₹0 Account Opening Charges

Get the link to download the App

Get it on Google PlayDownload on the App Store
Open Free Demat Account!
Join our 3 Cr+ happy customers