Proposed UPI merchant fee could create new revenue pool for banks and payment apps
A proposed Rs 8 fee on a Rs 2,000 UPI merchant payment would be shared among issuing and acquiring banks, third-party apps, processing banks and NPCI. SBI and other large account-holding banks could capture the biggest share, while PhonePe, Google Pay, Paytm and peers gain a potential monetisation route.
What happened
UPI merchant fees would primarily benefit banks with large account bases, while third-party payment apps gain a new monetisation stream. For a Rs 2,000 payment,
Key facts
- SBI: 25% debit-card market share
- Bank of Baroda: 8%
- HDFC Bank: 6.2%
- Canara Bank: 5.9%
- Union Bank: 5.6%
- Rs 8 fee per Rs 2,000 payment
- Issuing bank: Rs 3.20
- Acquiring bank: Rs 2.40
- Third-party app: Rs 1.60
- App processing bank: Rs 0.80
- Seven transaction-fee participants
Why this matters
Potential UPI fee pools increase the strategic value of acquiring capabilities, payment-app distribution and bank partnerships across India’s payments ecosystem.