ICICI Bank to Charge Payment Aggregators for UPI Transactions Starting August 1

ICICI Bank is expected to begin charging payment aggregators (PAs) a fee for processing UPI transactions from August 1, 2025, as per news reports. This follows similar practices already in place at Yes Bank and Axis Bank. 

Payment Aggregators Fee Details

For PAs maintaining an escrow account with ICICI Bank, the proposed fee is 2 basis points per transaction, with a cap of ₹6. For those without an escrow account, the fee will be 4 basis points per transaction, capped at ₹10. These charges will not apply if the transaction is settled directly into a merchant’s ICICI Bank account.

Although UPI transactions are free for both consumers and merchants due to the zero Merchant Discount Rate (MDR) mandate, banks incur costs for processing, infrastructure, and system maintenance. NPCI charges banks a switch fee, and some banks pass this cost to payment aggregators.

Yes Bank and Axis Bank have already been charging similar fees to PAs for the past 8-10 months. ICICI Bank will become the 3rd major bank to follow this structure. As per reports, the bank’s decision is in line with ongoing adjustments across the sector.

ICICI Bank's Role in the UPI Ecosystem

ICICI Bank is currently the 3rd-largest Payee Payment Service Provider (PSP) in the UPI network, after Yes Bank and Axis Bank. In June 2025 alone, it processed around 1.7 billion UPI transactions, acting as a key player in payment settlements for aggregators and merchants.

Read More: Say Goodbye to Free UPI? What the RBI Governor Just Hinted Will Surprise You!

Conclusion

The new fee structure marks a shift in how UPI transaction costs are managed within the banking and payments ecosystem. ICICI Bank's implementation may lead to wider adoption of similar models across other financial institutions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/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 the securities market are subject to market risks, read all the related documents carefully before investing.