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