ICICI Bank To Levy Fees On UPI Transactions Via Payment Aggregators From Aug 1
For payment aggregators without an ICICI Bank escrow account, the charge will be two times higher at 4 bps, with the cost capped at Rs 10 per transaction.
ICICI Bank is set to start levying charges on payment aggregators for processing Unified Payments Interface transactions starting August 1, according to people familiar with the matter.
The move marks a significant shift in the cost dynamics of UPI transactions and could impact aggregators not directly linked with the private sector lender.
As per a communication sent by ICICI Bank to payment aggregators earlier this month, the bank will impose a fee of 2 basis points per transaction which will be capped at Rs 6 on aggregators that maintain an escrow account with ICICI Bank.
However, for those without an ICICI Bank escrow account, the charge will be two times higher at 4 bps, with the cost capped at Rs 10 per transaction.
Merchants with an ICICI Bank account will not bear any cost, and the charges are being directed specifically at payment aggregators, entities that facilitate digital payments for online and offline merchants.
The fee is being levied because ICICI Bank bears the cost payable to the National Payments Corporation of India for routing UPI transactions through its infrastructure, a source said.
The implication of this move will be crucial for payment aggregators and merchants who do not have any direct or indirect banking relationship with ICICI Bank.
This has come as the Reserve Bank of India Governor Sanjay Malhotra last week said in a fireside chat that, while the UPI system currently operates without any charges for users, it is the government that has been footing the bill by subsidising banks and other stakeholders who enable the seamless, real-time payments infrastructure.
"As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Obviously, some costs have to be paid," he had said.
Malhotra had made it clear that while India remains committed to ensuring that digital payments are efficient, secure, and accessible, the sustainability of the infrastructure cannot be ignored. "Costs will have to be paid. Someone will have to bear the cost," he had said.
The rise in UPI transactions and volumes has added pressure on the backend infrastructure, much of which is maintained by banks, payment service providers, and the NPCI.
With no revenue stream from UPI transactions owing to a government-mandated zero merchant discount rate policy, industry players have repeatedly flagged the model as financially unsustainable.
