UPI users take note! Google Pay introduces convenience fee for these transactions – The Times of India

Introduction of platform charges for invoice funds by Google Pay signifies a wider motion in direction of monetising UPI transactions.

Google Pay, a outstanding UPI (Unified Funds Interface) platform, has begun implementing a convenience fee for utility invoice funds, together with electrical energy and cooking gasoline payments. Beforehand free for low-worth transactions, the service now fees between 0.5% and 1% plus GST for funds made utilizing credit score and debit playing cards.
This improvement follows the platform’s earlier implementation of a Rs 3 convenience fee for cellular recharges carried out over a yr in the past.
A evaluate by ET revealed {that a} buyer paid roughly Rs 15 as “convenience fee” while settling an electrical energy invoice with a bank card. The cost, which included GST, was additionally described as a “processing fee for debit and bank card transactions”.
An business insider defined to the monetary every day that the introduction of platform charges for invoice funds by Google Pay signifies a wider motion in direction of monetising UPI transactions, as service suppliers purpose to get well cost processing prices. The supply added that fintech corporations are striving to attain a steadiness between enlargement and sustainable income as UPI utilization will increase.
Additionally Learn | Tesla India entry: Why Donald Trump has mentioned it will be ‘very unfair’ for Elon Musk’s Tesla to arrange a manufacturing unit in India
Google Pay maintains a big market presence, dealing with roughly 37% of UPI transactions, rating second to Walmart-supported PhonePe. The platform processed UPI transactions value Rs 8.26 lakh crore as of January.
In line with an knowledgeable supply, charging convenience or platform charges is commonplace observe within the business. The supply indicated that whereas Google Pay beforehand coated this expense, it has now opted to switch the associated fee to users.
Google Pay’s web site signifies that whereas convenience charges apply to card funds, UPI transactions linked on to financial institution accounts stay fee-free. The timing of when these fees had been launched stays unclear.
For particular invoice funds together with water, piped gasoline and electrical energy, PhonePe implements convenience charges on card transactions, as acknowledged on their web site. Equally, Paytm levies platform charges between Rs 1 to Rs 40 for UPI recharges and varied utility invoice funds, together with gasoline, water and bank card settlements.
UPI’s widespread adoption hasn’t translated into substantial income for fintech corporations. PwC’s examine reveals that processing UPI particular person-to-service provider transactions prices stakeholders roughly 0.25% of transaction worth. Throughout FY24, UPI transaction processing bills reached Rs 12,000 crore, with Rs 4,000 crore spent on transactions beneath Rs 2,000.
Additionally Learn | What’s in a reputation? How dropping one phrase from its identify value Bira 91 beer maker Rs 80 crore in gross sales!
The Indian authorities’s coverage since 2020 has waived MDR for UPI transactions beneath Rs 2,000 to spice up digital funds. From 2021, the federal government started protecting MDR prices for these smaller transactions. Transactions exceeding Rs 2,000 allow a 1.1% service provider fee.
“The Indian authorities has performed an important position in making certain UPI’s progress, protecting the prices related to low-worth transactions to encourage adoption,” an business government mentioned. “Nonetheless, the absence of MDR for smaller transactions has left UPI platforms with restricted avenues to generate income straight from users.”
UPI’s progress trajectory stays sturdy, with January 2025 recording 16.99 billion transactions value Rs 23.48 lakh crore. This exhibits a 1.55% quantity enhance and 1% transaction worth progress from December 2024, while demonstrating 39% yr-on-yr progress.