India’s leading private sector lender, ICICI Bank, has announced a new fee structure for certain UPI (Unified Payments Interface) transactions, marking a significant change for merchants and payment aggregators. Starting August 1, the bank will impose transaction fees on UPI payments routed through Payment Aggregators (PAs), with specific charges depending on the type of account and transaction.

Who Will Be Affected?

These charges apply exclusively to merchants—business owners such as shopkeepers, restaurant operators, and other service providers who use UPI for receiving payments through PAs. Regular customers making payments for personal use will not be impacted by these changes.

Details of the New Charges

• For Merchants with Escrow Accounts in ICICI Bank:
  A fee of 0.02% per transaction will be levied.

  • Maximum cap: ₹6 per transaction.

• For Merchants Without Escrow Accounts in ICICI Bank:
  A fee of 0.04% per transaction will be applied.

  • Maximum cap: ₹10 per transaction.

When Will Charges Not Apply?

If a UPI payment is directly transferred into the merchant’s ICICI Bank account—bypassing any Payment Aggregator—no transaction fee will be charged.

Why Is ICICI Bank Imposing These Charges?

Although the Indian government currently imposes zero MDR (Merchant Discount Rate) on UPI transactions for merchants, banks still incur costs through the switching fees charged by the National Payments Corporation of India (NPCI). To offset these costs, some banks like ICICI have decided to collect a nominal fee from merchants via Payment Aggregators.

Upcoming UPI Rule Changes

NPCI is also rolling out several new guidelines aimed at improving the stability and transparency of the UPI ecosystem. These include:

• Limits on the number of balance checks

• Restrictions on checking multiple bank accounts within one app

• Scheduled execution of auto-debit (AutoPay) transactions

• Caps on checking payment status

• Time-bound limits on payment reversals

These updates are being introduced following frequent complaints about UPI outages and delayed payments. NPCI hopes these rules will enhance the user experience and reduce disruptions in essential transactions.

Bottom Line:
From August 1, ICICI Bank merchants using Payment Aggregators will need to account for small transaction fees on UPI payments. While the general public remains unaffected, businesses should review their current payment setup to avoid unnecessary charges.