In a move that could significantly reshape India’s digital payments landscape, ICICI Bank has announced it will introduce fees for payment aggregators on UPI (Unified Payments Interface) transactions, starting August 1, 2025.
This means that platforms acting as intermediaries—such as payment gateways and digital wallets—will now incur charges for processing UPI transactions through ICICI Bank infrastructure. While the bank has yet to publicly disclose the fee structure, the development is seen as a pivotal moment for India’s highly active and fast-growing digital payment ecosystem.
Why It Matters
India’s UPI system, developed by NPCI (National Payments Corporation of India), has so far offered zero-fee transactions to consumers and merchants, with banks and aggregators absorbing operational costs. However, with the sharp increase in transaction volumes and rising infrastructure costs, banks have long debated the need to monetize backend UPI services.
Implications for Fintech & Merchants
Payment aggregators like Razorpay, Paytm, PhonePe, and others may now need to adjust pricing models or absorb the costs, potentially affecting small businesses and merchants who rely on low-cost digital payment solutions.
Analysts say this move might also trigger a trend where other banks follow suit, bringing the long-standing debate on UPI monetization into the spotlight.
Consumer Impact
As of now, the fee is expected to apply only to payment aggregators, not end consumers. However, if aggregators pass on the costs, small transaction-based fees could become the norm in some segments.
Looking Ahead
This decision comes amid broader discussions by the Reserve Bank of India and NPCI about the sustainability of India’s digital payments infrastructure. ICICI Bank’s move will likely influence policy direction and business strategies in the months ahead.
Stay tuned to Allycaral for updates on how this change evolves and what it means for consumers, fintech platforms, and the Indian economy.
