Google Pay, one of India’s leading UPI-based payment platforms, has introduced a convenience fee for bill payments made using credit and debit cards, shifting costs previously absorbed by the company to consumers. The charges range from 0.5% to 1% of the transaction value, plus applicable GST.
Key Highlights:
• Applies to Credit/Debit Card Transactions: Google Pay users paying for utilities such as electricity and gas bills via credit or debit cards will now be charged a processing fee. • UPI Bank Transactions Remain Free: Payments made directly from a bank account using UPI remain exempt from this convenience fee. • Industry-Wide Trend: Competitors like PhonePe and Paytm also charge similar fees for bill payments, recharges, and other services. • Rising Costs for Fintech Firms: A PwC analysis estimates that fintech companies collectively incurred a cost of Rs 12,000 crore for processing UPI transactions in FY24, prompting firms to explore revenue generation models.
To promote digital payments, the Indian government mandated the waiver of the Merchant Discount Rate (MDR) for UPI transactions below Rs 2,000 in 2020. While the government reimburses the cost for such transactions, platforms still struggle to generate direct revenue from users.
Despite these challenges, UPI continues to surge, recording 16.99 billion transactions worth Rs 23.48 lakh crore in January 2025, reflecting a 39% year-on-year growth.