Google Pay Introduces Convenience Fee on Credit and Debit Card Bill Payments
Google Pay Introduces Convenience Fee on Credit and Debit Card Bill Payments
The emergence of platform fees is gradually becoming standard practice, as numerous fintech firms seek to transfer transaction costs to their users.
Google Pay has implemented a convenience fee for bill payments made using credit and debit cards, with charges varying between 0.5% and 1% of the transaction amount, in addition to GST. This decision reflects a trend towards monetizing UPI transactions to help cover processing expenses as the adoption of UPI continues to increase. This update comes after Google Pay’s previous move to introduce a Rs 3 convenience fee on mobile recharges more than a year ago.
A report from Economic Times indicated that a customer incurred a Rs 15 ‘convenience fee’ while using his credit card to pay his electricity bill. This charge was described as a “processing fee for debit and credit card transactions,” which also included GST.
The report cited an insider who mentioned that GPay’s implementation of platform fees for bill payments represents a major change in the monetization of UPI transactions, as service providers seek methods to mitigate payment processing costs.
The emergence of platform fees is gradually becoming standard practice, as numerous fintech firms seek to transfer transaction costs to their users. Google Pay’s website states that this fee is intended to offset the expenses associated with processing card payments, although the timeline for this change remains unclear.
Other platforms are adopting a similar approach. PhonePe imposes a fee for specific bill payments made with credit or debit cards, while Paytm levies charges ranging from Rs 1 to Rs 40 for mobile recharges and utility bill payments via UPI.
The imposition of convenience fees is not limited to Google Pay. PhonePe also applies charges on credit and debit card transactions for bill payments, such as those for water and piped gas. Additionally, Paytm, another significant player in India’s digital payments sector, charges platform fees between Rs 1 and Rs 40 for UPI recharges and bill payments, according to details on its website.
Despite the widespread popularity of UPI, generating revenue directly from these transactions continues to pose a challenge for fintech companies.
Google Pay currently holds a significant share of the UPI market, accounting for nearly 37 per cent of transactions, second only to PhonePe, which is backed by Walmart. In January 2025, the platform processed transactions worth Rs 8.26 trillion.
In the financial year 2024 (FY24), the overall expense for processing UPI transactions reached around Rs 12,000 crore, with Rs 4,000 crore attributed to low-value transactions under Rs 2,000, as reported by The Economic Times.
Since 2020, the Indian government has enforced a policy that prohibits the Merchant Discount Rate (MDR) – the fee charged to merchants for processing digital transactions – on UPI transactions below Rs 2,000 to promote digital payments. In 2021, the government also initiated reimbursements for these MDR expenses. For transactions that exceed Rs 2,000, a merchant fee of 1.1 percent is allowed.
UPI usage in India continues to rise. In January 2025, UPI transactions reached 16.99 billion, with a total value of Rs 23.48 trillion. This marks a 1.55% increase in transaction volume and a 1% growth in value compared to December 2024. Year-over-year, UPI transaction volume saw a significant growth of 39%.
