From August 1, 2025, ICICI Bank UPI charges will apply—but only to payment aggregators, not individual consumers or merchants. This move follows similar steps taken by Axis Bank and Yes Bank.
What’s Changing for Aggregators
Fee Structure
- Aggregators with an ICICI Bank escrow account will pay 2 basis points (0.02%) per UPI transaction, capped at ₹6.
- Those without escrow accounts face 4 basis points (0.04%), capped at ₹10.
Who Is Impacted
- Consumers and merchants will experience no direct charges.
- Only payment aggregators like RazorPay, Cashfree, and PayU are affected.
Why the Charges?
Banks and NPCI incur costs for UPI infrastructure—such as switch fees, network maintenance, and servers—but UPI remains free for users due to the zero Merchant Discount Rate (MDR) mandate. ICICI Bank is shifting part of its operational cost burden toward aggregators instead.
Industry Context & Precedents
- Axis Bank and Yes Bank introduced similar aggregator fees 8–10 months ago, setting an industry benchmark.The Economic Times
- ICICI Bank ranks as the third-largest UPI payee player, handling nearly 1.7 billion transactions in June 2025.
Potential Impact
- Aggregators may choose to absorb fees or pass them onto merchants, potentially increasing merchant costs.
- Small and mid‑size merchants might feel pressure if aggregators factor the costs into service charges. However, since merchants cannot charge users for UPI MDR, the cost burden may be absorbed upstream
Quick Summary Table
| Stakeholder | Fee Structure | Transaction Limit |
|---|---|---|
| Payment Aggregator (escrow) | 0.02% (2 bps), max ₹6 per txn | N/A |
| Payment Aggregator (non‑escrow) | 0.04% (4 bps), max ₹10 per txn | N/A |
| Merchant | No separate fee if settled in ICICI account | Free |
| Consumer | No impact—no direct charges | Free UPI to use |
Looking Ahead
This policy signals a broader industry trend toward cost recovery via aggregator fees. As UPI usage continues growing, we may see more banks adopting similar models. Analysts suggest this could brew further scrutiny into UPI’s fee structure at regulatory levels.
Payment aggregators may respond by negotiating bulk fee rebates, restructuring fee models, or helping merchants optimize payment pipelines to manage impact.
Bottom Line
ICICI Bank’s new UPI charges will not affect everyday users or merchants directly. The cost burden will fall on payment aggregators. Depending on how these aggregators respond, small merchants might eventually see changes in pricing structures or fee disclosures.
