ICICI Bank, India’s second-largest private sector lender, started imposing charges on payment aggregators (PAs) for processing Unified Payments Interface (UPI) transactions on merchant platforms, starting August 1.

According to a Business Standard report, the bank has notified aggregators about the new fee structure through official communication.

The report claimed PAs that hold escrow accounts with ICICI Bank will be charged 2 basis points (bps) per transaction, with a cap of ₹6. For those without an escrow account at the bank, the fee will be 4 bps per transaction, capped at ₹10.

Payment aggregators typically levy platform, convenience, and other charges on merchants for processing payments. Since end users are not charged for UPI transactions, banks are now eyeing this revenue stream by imposing fees on payment aggregators, according to sources.

The development came barely days after the Reserve Bank of India (RBI) Governor Sanjay Malhotra hinted at a shift in the current zero-charge framework for UPI transactions.

Speaking at a Financial Express event, Malhotra said, “Payments and money are a lifeline. We need a universally efficient system. As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Some costs have to be paid.”

Malhotra noted that while India remains committed to secure and inclusive digital payments, the long-term viability of the system cannot be ignored.

“Any important infrastructure must bear fruit...its cost should be paid whether collectively or by the user,” he added.

Currently, UPI runs without any charges for users, with the government footing the bill to keep the system free.

Malhotra clarified that the final decision on continuing the zero MDR (merchant discount rate) policy rests with the government, suggesting that a policy rethink may be on the horizon.