The ICICI Bank has introduced a new fee structure for the Reserators (PAS) Processing Unified Payments Interface (UPI) transactions on the merchant platform. From August 1, effective changes will affect platforms like Google Pay, PhonePe, Mobikwik and Razorpay.
New Fee Structure for Payment Agreers
Payments agargeters act as an intermediary between banks and traders, handling the collection and disposal of payment. According to reports, the ICICI Bank has informed the PAS that people who maintain an Escro account with the bank would pay 2 basis points per transaction, capted on the rupee. 6. Without an Escro account in the bank, for those people, the fee will be 4 basis points, a cap on the rupee. 10 per transaction.
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If the UPI payments are fixed directly to the ICICI bank account of a merchant, no fee will apply, so that the bank can benefit from keeping these funds temporarily. Industry officials believe that this step aligns the recent regulator discussion on the mudification of the UPI infrastructure.
Private sector colleagues such as Yes Bank and Axis Bank already charge PAS for UPI payment. These three banks handle a major part of the UPI transaction for both the payments and the payments simultaneously.
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Experts say that the rapid development of UPI, especially in merchant transactions, has increased the cost of infrastructure for banks. Since the UPI transaction does not attract a merchant discount rate (MDR), banks earn less revenue by facilitating them. The PAS offers a way to offset operating expenses by introducing fees for PAS.
Impact on traders and customers
Currently, banks also pay a fee to use the UPI switch. PA platforms recover cost from traders through platform fees, convenience fees and other charges, while customers give exemption from direct UPI fee. Industry sources suggest that PAS can pass these new costs to traders or absorb them, based on agreements.
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When customers pay through UPI on merchant platforms, the PA routes the transaction between the customer’s bank and the merchant bank. Often, the fund is deposited in an Escro account managed by PA before the first merchant is transferred. This setup settlement ensures safety but can now attract additional costs due to the new policy of ICICI Bank.
