According to NPCI data reported by Moneycontrol, India’s Unified Payments Interface (UPI) has crossed 700 million transactions in a single day for the first time on August 2. Meanwhile, ICICI Bank has started charging payments such as PhonePe and Google, paying per transaction fee, increasing the fresh debate on the stability of UPI’s zero-fee models.
UPI Development Project and New Milestone
In July 2025, UPI recorded about 19.47 billion transactions. 25.1 lakhs, showing 22% by volume 35% year-on-year increase and 22% by value. With the continuous increase in daily volume, more than 700 million in June in June to early August 700 million, the government’s target is increasing rapidly in 2026 in 2026.
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ICICI Bank rolled UPI transaction fee
Effective since August 1, ICICI Bank has introduced a processing fee model for payment agaries (PAS) handling merchant UPI transactions. In ICICI will be charged at 2 basis points (BPS) (BPS) per transaction from aggrketers with escrow accounts (capted capted 6), whereas without such accounts, those people have to face 4 BPS fee) 10).
However, traders who receive direct settlements in their ICICI bank accounts are exempted from these allegations.
Earlier, only the bank and Axis Bank imposed a similar fee among private lenders. ICICI’s move reflects pressure on banks to offset the cost of infrastructure, increasing a burden between the fall in government subsidy and the absence of MDR (merchant discount rate).
Fintech and economic implication for traders
Traditionally, UPI payments are free for both users and traders, Fintech firms and banks have absorbed backnd costs, including the fees paid to the NPCI’s UPI switch. With these new allegations, the PAS can either opt for absorbing fees, which can squeeze margin, or pass them traders, potentially increase the cost of acceptance for small businesses.
UPI Outlook: Targeting 1 billion transactions daily
Despite the emergence of new allegations, UPI continues to perform a strong monthly development of 5-7% and a year-on-year growth of about 40%, which is inspired by merchant adoption and widespread digital penetration, alone merchant transactions alone accounts for more than 60% UPI volumes.
As the UPI comes with global dominance as the world’s largest real-time retail payment system, the debate on permanent migration and infrastructure financing becomes important. With the support from RBI, with the RBI’s support, with the RBI’s support, the ICICI move may change the financial ecosystem supporting India’s digital payments revolution, with the increase in pressure on the aggregator business model.
