ICICI is implementing UPI fees for the payment college; What does it mean to you

ICICI presented a fee for the operating interface transactions (UPI) that has been processed through PAS compounds, a step that can significantly affect the technology environmental system in India and raises a greater discussion about the sustainability of free digital payments. Under the new policy, fees will be imposed on PAS that maintain guarantee accounts with ICici 2 Paise per 100 rupees, in 6 rupees per transaction. For those who have no guarantee accounts, fees double to 10 rupees per treatment. However, if the transaction is settled directly in the ICICI account for merchants, no fees will be imposed. This structure is designed to motivate traders on the bank directly with ICICI, allowing the bank to earn a bottle on inactivity boxes.

These fees are connected to the payment complexes through official messages from the bank, according to a report at Business Standard. Players in industry such as Razorpay, Payu and Pine Labs – who facilitate UPI, cards and wallet transactions – will need to review their cost structures.

Why do you charge?

UPI became the backbone of the digital payment system in India, as transactions sizes rose to more than 1900 rupees of 25 rupees in one month. However, this rapid growth came at a cost. Banks have to invest heavily in infrastructure, deal with background processing, and pay the switching fees to direct UPI transactions – all without imposing fees on consumers or merchants due to the “free” government free “position.

Despite the popularity and support of policy to maintain free UPI transactions for consumers and young merchants, the issue of the cost -to -bear is still unleashed. Organizational bodies such as the Indian Reserve Bank (RBI) expressed their support for the idea of free payments, but they acknowledge that financial sustainability must be addressed. Rbi Sanjay Malhotra recently stated that someone must bear the cost of operating the system at the end.

After this feeling, it seems that the ICici step reflects a shift in the banking strategy – the movement of UPI’s costs to income transactions services, at least for institutions and complex clients.

Impact on payment complexes

The payment complexes are now discovered in a difficult place. To date, many have supported the cost of UPI transactions using revenues from other services. But as the back interface increases, they may find it difficult to protect merchants from these costs. This may lead to pricing changes or re -negotiation with merchants or new strategies for guidance and settlement.

Other private banks, including Axis Bank and Yes Bank have carried out similar fees. These three – on the side of ICici – among the best payment service providers in the UPI scene in India, are responsible for a large share of both side transactions for motivation and motivation.

Industry people indicate that the new pricing may have been affected by organizational signals. “The banks have invested extensively in the UPI key, issuing and acquiring infrastructure. It is not surprising that you are looking for revenue forms now,” said CEO of the payments company.

Wider effects

The peer sector to the manager (P2M), in particular, leads the growth of UPI size. However, since UPI transactions do not attract a commercial discount rate (MDR), banks and collections get the minimum revenue from this increase.

Industry experts believe that ICICI step is the beginning of a value -based liquefied liquefaction model, and the general transition from a general model to the articles -based fees. According to Fintech Paramdeep Singh investor, this shift will have broad -ranging effects: “This will lead to the reshaping of guarantee strategies, pricing models, and playing book for acquisition for B2B Fintechs.

With the high competition and the high operational costs, Fintechs will need to adapt quickly, whether by negotiating better deals with banks, innovation on prices, or improving efficiency in directing transactions. The axis capacity can quickly determine who remains in an increased cost environment.