Free UPI? Not for Businesses Anymore—ICICI Bank’s New Charges Explained
Mumbai, 1st August 2025: In a move that could impact digital payments by businesses, ICICI Bank has announced that it will start charging transaction fees on UPI payments routed through Payment Aggregators (PA) starting August 1, 2025. While individual users remain unaffected, the charges will apply to merchants such as shopkeepers, restaurants, and other business entities using the bank’s services for UPI transactions.
This latest development comes amid ongoing efforts by the National Payments Corporation of India (NPCI) to streamline and stabilize UPI infrastructure in the wake of recent server issues.
Here’s What Merchants Need to Know
For merchants with escrow accounts in ICICI Bank PA: A 0.02% transaction fee will be levied per payment, with a maximum cap of ₹6 per transaction.
For merchants without escrow accounts in ICICI Bank: The charge will be 0.04% per transaction, capped at ₹10.
No charges will be applied if the transaction is directly credited to the merchant’s ICICI Bank account.
The new policy is aimed at recovering switch fees charged by NPCI to banks for routing UPI transactions. Although the government currently maintains a zero Merchant Discount Rate (MDR) policy, NPCI does impose fees on banks, and some banks have started passing these on to payment aggregators.
Why This Move?
In recent months, UPI users have experienced disruptions, including frequent server downtimes and payment failures. To address these issues and ensure smoother transactions, NPCI has implemented new UPI rules, which include:
Limits on balance checks
Restricted timing for autopay setups
Limits on checking payment status
Cap on payment reversals
These restrictions are designed to reduce pressure on UPI servers and prioritize essential transactions during peak hours.
Impact on Merchants
While the charges may seem nominal, businesses handling large volumes of small-value UPI transactions may feel the cumulative financial impact. Experts believe this could lead some merchants to reconsider their payment routing methods or explore alternative banks or aggregators.
