Google Pay now charges convenience fees on bill payments via credit, debit cards

Mumbai: Google Pay, one of the leading Unified Interface Payments (UPI) platforms, has introduced a convenience fee for bill payments made through credit and debit cards. These charges are applicable while paying electricity, water and cooking gas bills. UPI payments made directly through bank accounts continue to be free. Fees ranging from 0.5% to 1% of the transaction value, plus the applicable goods and services tax (GST) are being levied on these transactions.PhonePe, the largest UPI payment provider, also charges a convenience fee for payments made via credit or debit cards for water, piped gas and certain electricity bills, as noted on its website. Paytm’s platform fee, which ranges from Rs 1 to Rs 40, applies to recharges via UPI and bill payments, including utilities such as gas, water, and credit card payments, according to its website.

This follows Google Pay’s earlier decision to introduce a Rs 3 convenience fee for mobile recharges over a year ago.

In one instance that ET reviewed, a customer was charged about Rs 15 as “convenience fee” when paying an electricity bill using a credit card. This fee was also labelled as a “processing fee for debit and credit card transactions” and included GST.

Charging a convenience or platform fee is a common industry practice, said a person familiar with the matter. While Google Pay previously absorbed this fee, it has now decided to pass it on to customers, the person said.

According to information available on Google Pay’s website, the convenience fee helps cover the costs of processing credit or debit card payments. However, no convenience fee is applied to UPI payments directly linked to a bank account. Exactly when the platform began passing these costs onto customers could not be immediately determined.“Google Pay’s introduction of platform fees for bill payments signals a broader shift toward monetising UPI transactions as service providers seek ways to offset the costs of processing payments,” said a person with knowledge of the matter. “As UPI adoption grows, fintech companies are trying to balance growth with sustainable revenue generation.”Google Pay, holds a dominant position, processing nearly 37% of UPI transactions, second only to PhonePe, backed by Walmart. As of January, the platform had processed UPI transactions totalling Rs 8.26 lakh crore.

Despite the popularity of UPI, fintech companies have faced challenges in generating significant revenue from such payments. According to a PwC analysis, stakeholders incur costs of nearly 0.25% of the transaction value for processing UPI person-to-merchant transactions. In FY24, the cost for processing UPI transactions amounted to around Rs 12,000 crore, with Rs 4,000 crore of that attributed to low-value transactions below Rs 2,000.

Since 2020, the Indian government has asked the Merchant Discount Rate (MDR) to be waived for UPI transactions under Rs 2,000 to promote digital payments. In 2021, the government began reimbursing MDR costs for these low-value transactions. For transactions above Rs 2,000, a merchant fee of 1.1% is allowed.

“The Indian government has played a crucial role in ensuring UPI’s growth, covering the costs associated with low-value transactions to encourage adoption,” an industry executive said. “However, the absence of MDR for smaller transactions has left UPI platforms with limited avenues to generate revenue directly from users.”

Despite the financial challenges, UPI continues to experience explosive growth. In January 2025, it recorded a total of 16.99 billion transactions, valued at Rs 23.48 lakh crore. This represented a 1.55% increase in volume and a 1% increase in transaction value from December 2024, with year-on-year growth at 39%.