{"id":1298350,"date":"2025-08-01T09:58:12","date_gmt":"2025-08-01T04:28:12","guid":{"rendered":"https:\/\/trak.in\/stories\/?p=1298350"},"modified":"2025-08-01T09:58:45","modified_gmt":"2025-08-01T04:28:45","slug":"icici-bank-will-charge-paytm-phonepe-other-pas-for-upi-transactions","status":"publish","type":"post","link":"https:\/\/trak.in\/stories\/icici-bank-will-charge-paytm-phonepe-other-pas-for-upi-transactions\/","title":{"rendered":"ICICI Bank Will Charge Paytm, PhonePe &amp; Other PAs For UPI Transactions"},"content":{"rendered":"\n<p>ICICI Bank, India\u2019s second-largest private lender, has announced that it will begin charging <strong>Payment Aggregators (PAs)<\/strong> for processing <strong>UPI transactions<\/strong> on merchant platforms starting <strong>August 1, 2025<\/strong>. This marks a significant development in the evolving UPI payments ecosystem, especially as banks look for monetization opportunities amid growing transaction volumes and mounting infrastructure costs.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/08\/Untitled-design-2-1280x720-1024x576-1.png\" alt=\"ICICI Bank Will Charge Paytm, PhonePe &amp; Other PAs For UPI Transactions\" class=\"wp-image-1298358\" srcset=\"https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/08\/Untitled-design-2-1280x720-1024x576-1.png 1024w, https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/08\/Untitled-design-2-1280x720-1024x576-1-300x169.png 300w, https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/08\/Untitled-design-2-1280x720-1024x576-1-768x432.png 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">New Charges Based on Escrow Relationships<\/h3>\n\n\n\n<p>According to internal communication <a href=\"https:\/\/www.business-standard.com\/finance\/news\/icici-bank-to-levy-fees-on-payment-aggregators-for-upi-transactions-125073101696_1.html\">accessed<\/a> by industry insiders:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>PAs <strong>with escrow accounts at ICICI Bank<\/strong> will be charged <strong>2 basis points (bps)<\/strong> per transaction, <strong>capped at \u20b96<\/strong>.<\/li>\n\n\n\n<li>PAs <strong>without an escrow account at ICICI Bank<\/strong> will face a <strong>4 bps fee<\/strong>, <strong>capped at \u20b910<\/strong> per transaction.<\/li>\n\n\n\n<li>No charges will apply <strong>if transactions are settled directly into an ICICI Bank merchant account<\/strong>, allowing the bank to benefit from fund float.<\/li>\n<\/ul>\n\n\n\n<p>This structured approach rewards PAs for deeper integrations with the bank while nudging others toward closer banking ties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Industry Context and Implications<\/h3>\n\n\n\n<p>With <strong>UPI peer-to-merchant (P2M) transactions surging<\/strong>, banks like ICICI, Yes Bank, and Axis Bank\u2014three top <strong>Payment Service Providers (PSPs)<\/strong>\u2014have invested heavily in building scalable and secure digital infrastructure. However, the <strong>absence of a Merchant Discount Rate (MDR)<\/strong> means banks earn little from each UPI transaction despite shouldering backend costs and <strong>paying a fee to use the UPI switch<\/strong>.<\/p>\n\n\n\n<p>Experts believe ICICI Bank\u2019s move may be inspired by RBI\u2019s recent statements around <strong>introducing UPI charges<\/strong> to sustain long-term infrastructure investments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Impact on Merchants and Customers<\/h3>\n\n\n\n<p>PAs typically charge merchants a <strong>platform or convenience fee<\/strong>, while end-users enjoy zero-cost UPI payments. Now, these new charges may:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Be <strong>absorbed<\/strong> by PAs, squeezing margins.<\/li>\n\n\n\n<li>Or be <strong>passed on to merchants<\/strong>, indirectly increasing costs for small businesses.<\/li>\n<\/ul>\n\n\n\n<p>Notably, <strong>credit card-based UPI payments<\/strong> are already subject to monetization, setting a precedent.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What Happens Behind the Scenes?<\/h3>\n\n\n\n<p>When a customer pays via UPI:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The <strong>PA acts as a bridge<\/strong> between the payer and payee banks.<\/li>\n\n\n\n<li>Funds are <strong>first settled in the PA\u2019s escrow account<\/strong>.<\/li>\n\n\n\n<li>The amount is then transferred to the <strong>merchant\u2019s account<\/strong> after verification.<\/li>\n<\/ol>\n\n\n\n<p>ICICI\u2019s move effectively targets this process by charging for facilitation, making it one of the first few large-scale monetization efforts in India\u2019s booming digital payments sector.<\/p>\n\n\n\n<p>As UPI scales beyond 12 billion monthly transactions, the <strong>pressure to build sustainable financial models<\/strong> for its backend infrastructure is prompting banks to get creative with fee structures.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ICICI Bank, India\u2019s second-largest private lender, has announced that it will begin charging Payment Aggregators (PAs) for processing UPI transactions on merchant platforms starting August 1, 2025. This marks a significant development in the evolving UPI payments ecosystem, especially as banks look for monetization opportunities amid growing transaction volumes and mounting infrastructure costs. New Charges [&hellip;]<\/p>\n","protected":false},"author":30,"featured_media":1298358,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[610,6776,765,359],"class_list":["post-1298350","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-icici-bank","tag-payment-aggregators","tag-paytm","tag-phonepe"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ICICI Bank Will Charge Paytm, PhonePe &amp; Other PAs For UPI Transactions - Trak.in - Indian Business of Tech, Mobile &amp; Startups<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/trak.in\/stories\/icici-bank-will-charge-paytm-phonepe-other-pas-for-upi-transactions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ICICI Bank Will Charge Paytm, PhonePe &amp; Other PAs For UPI Transactions - Trak.in - Indian Business of Tech, Mobile &amp; Startups\" \/>\n<meta property=\"og:description\" content=\"ICICI Bank, India\u2019s second-largest private lender, has announced that it will begin charging Payment Aggregators (PAs) for processing UPI transactions on merchant platforms starting August 1, 2025. 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