GPay Introduces Extra Fees for UPI Payments

Google Pay users who have been enjoying free transactions will now have to pay a convenience fee for certain bill payments. The digital payments giant has introduced charges for transactions made via credit and debit cards, shifting away from its earlier practice of absorbing these costs.

New Charges on Google Pay Transactions

Who Will Be Charged?

Bill payments (electricity, gas, water, etc.) made using credit or debit cards.
Mobile recharges (Google Pay introduced a similar charge over a year ago).

Who is Exempt?

UPI payments linked directly to bank accounts remain free.

How Much is the Convenience Fee?

Between 0.5% to 1% of the transaction amount, plus applicable GST.
Example: A ₹3,000 electricity bill paid via a credit card could incur a ₹15-₹30 processing fee.

A recent case reported by Economic Times highlighted a ₹15 deduction as a “processing fee” for a credit card electricity bill payment on Google Pay.

Why is Google Pay Introducing Platform Fees?

A fintech industry expert told ET:

“Google Pay’s decision to introduce platform fees for bill payments reflects a larger trend of fintech companies looking to offset the costs of payment processing. As UPI usage surges, platforms are balancing growth with sustainable revenue streams.”

The move aligns with industry trends, where fintech companies pass transaction costs to users instead of bearing them internally.

Google Pay’s Market Dominance & UPI’s Growth Challenge

Google Pay handles 37% of all UPI transactions, second only to Walmart-backed PhonePe.
In January 2025, Google Pay processed UPI transactions worth ₹8.26 lakh crore.
Despite UPI’s massive adoption, fintech firms struggle to generate direct revenue from these transactions.

How Other Platforms Charge Users?

PhonePe – Charges a convenience fee for bill payments made via credit or debit cards.
Paytm – Charges a platform fee (₹1-₹40) for mobile recharges and bill payments via UPI.

What This Means for Users?

If you pay bills via UPI (linked to your bank account) → No extra charges.
If you use a credit or debit card for bill payments → Expect convenience fees.
Other platforms like PhonePe & Paytm already follow similar pricing → No escape from transaction fees.

As fintech firms search for sustainable revenue models, more platforms may follow Google Pay’s lead, making "free" digital transactions a thing of the past.