From August 1, 2025, ICICI Bank will begin charging transaction fees on UPI payments processed through payment aggregators, joining other banks like Yes Bank and Axis Bank in implementing such charges.

New UPI Charges Policy from ICICI Bank

ICICI Bank has announced a new fee structure that will apply to UPI (Unified Payments Interface) transactions handled via payment aggregators (PAs). Starting August 1, 2025, these charges are set to come into effect, marking a significant shift in the cost dynamics of digital payments for businesses. This move follows similar steps taken by Yes Bank and Axis Bank over the past few months.

What Are the Charges?

The charges will depend on whether the payment aggregator maintains an escrow account with ICICI Bank:

• For PAs with ICICI escrow accounts:
  A 0.02% fee (2 basis points) will be levied per UPI transaction. However, the maximum cap on this fee will be ₹6 per transaction.

• For PAs without ICICI escrow accounts:
  The transaction fee will be 0.04% (4 basis points), with a maximum limit of ₹10 per transaction.

These charges will be applicable only to the aggregators, not directly to consumers making UPI payments.

When Will There Be No Charges?

ICICI Bank clarified that no fee will be charged when a UPI transaction is directly settled into a merchant's ICICI Bank account. This means businesses that receive payments without using intermediaries like payment aggregators will not face any additional fees.

Why This Charge Now?

Although the government mandates zero Merchant Discount Rate (MDR) on UPI transactions — ensuring customers and merchants can use UPI for free — banks still incur operational costs.

To recover part of these expenses, NPCI (National Payments Corporation of India) levies a switching fee on banks. To manage this cost, some banks — now including ICICI — have started passing it on to payment aggregators, who serve as intermediaries for merchants.

What Could Be the Impact on Merchants?

While this fee is aimed at aggregators, it might eventually impact merchants indirectly. Payment aggregators often charge businesses platform fees, reconciliation charges, and other service costs. With banks adding another layer of charges, aggregators may choose to revise their pricing — possibly passing on the cost to their merchant clients.

So, while UPI remains free for end consumers, the business ecosystem behind these transactions is evolving, potentially affecting small and medium-sized merchants who rely on third-party platforms for digital payments.

Other Banks Already Charging

Banks like Yes Bank and Axis Bank have reportedly been charging payment aggregators for UPI transactions for the past 8–10 months. ICICI Bank's move aligns it with these peers, indicating an industry-wide shift in how banks approach the economics of UPI transactions.

Conclusion

ICICI Bank’s decision to impose UPI transaction charges on payment aggregators marks another step in the monetization of backend digital payment infrastructure. As more banks look for sustainable models to support UPI operations, the ecosystem may witness further changes, especially affecting how merchants and aggregators manage their costs.

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