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Google Pay now charges fee for these payments
The charges are between 0.5% and 1% for bill payments

Google Pay now charges fee for these payments

Feb 20, 2025
12:53 pm

What's the story

Google Pay, the front-runner in the Unified Payments Interface (UPI) game, has started levying a convenience fee for bill payments. The new policy comes into play for payments made via credit and debit cards. The charges are between 0.5% and 1% of the transaction value, plus the applicable Goods and Services Tax (GST). Earlier, customers weren't charged this fee for low-value transactions on Google Pay.

Fee details

Convenience fee applicable to various bill payments

The convenience fee introduced by Google Pay applies to several bill payments, such as electricity and cooking gas bills. In one case examined by ET, a customer was charged about ₹15 as a "convenience fee" for paying an electricity bill via credit card. This was also mentioned as a "processing fee for debit and credit card transactions," including GST.

Industry shift

Google Pay's move reflects industry trend

The introduction of a platform fee by Google Pay marks a wider industry trend of monetizing UPI transactions. The move is part of a strategy to offset the cost of processing payments as UPI adoption continues to grow. "Google Pay's introduction of platform fees for bill payments signals a broader shift toward monetizing UPI transactions as service providers seek ways to offset the costs of processing payments," an insider told ET.

Market dominance

Google Pay's market share and transaction volume

Google Pay is a major player in the UPI space, accounting for nearly 37% of all UPI transactions. It comes second only to Walmart-backed PhonePe. As of January 2025, Google Pay had processed UPI transactions worth a whopping ₹8.26 lakh crore. The convenience fee introduced by the company is viewed as an industry standard practice to cover processing costs for credit or debit card payments.

Fee exemption

Convenience fee not applicable to all UPI payments

It's worth noting that the convenience fee introduced by Google Pay isn't applicable on all UPI payments. As per information on the company's website, the fee is only levied on credit or debit card payments and not on UPI transactions directly linked to a bank account. This policy is similar to those of other leading UPI payment providers such as PhonePe and Paytm, which also levy similar fees on certain transactions.

Revenue hurdles

UPI platforms face revenue generation challenges

Despite UPI's ubiquity, fintechs have been unable to monetize these payments significantly. According to a PwC analysis, stakeholders incur costs of nearly 0.25% of the transaction value for processing UPI person-to-merchant transactions. In FY24, the cost of processing UPI transactions amounted to nearly ₹12,000 crore, with ₹4,000 crore coming from low-value transactions under ₹2,000.