Google Pay Starts Charging Fees For Credit, Debit Card Bill Payments

Leading digital payment platform Google Pay has introduced a convenience fee on bill payments made via credit and debit cards. Thus marking the end of fee-free transactions for millions of users paying for utilities like electricity and gas.

Charges

Going by Google Pay's website, the company has started imposing fees from 0.5% to 1% of the transaction value, plus applicable Goods and Services Tax (GST). However, users are not being levied any charges for payments made through UPI-linked bank accounts.
As per the industry insiders, this shift reflects a broader trend among fintech companies to monetize UPI transactions as they seek to make their business models sustainable amid rising digital payment adoption. Google Pay, which commands nearly 37% of the UPI market, processed transactions worth Rs 8.26 trillion in January 2025, trailing only PhonePe, which is backed by Walmart.

Other major players in India's digital payments space, such as PhonePe and Paytm, have also introduced similar charges. PhonePe applies fees on credit and debit card transactions for bill payments, including water and gas bills, while Paytm charges platform fees ranging from Rs 1 to Rs 40 on UPI recharges and bill payments.

UPI Transaction In India

The cost of processing UPI transactions has become a significant concern for the industry. In FY24, the total cost of UPI transactions was approximately Rs 12,000 crore, with Rs 4,000 crore attributed to low-value transactions below Rs 2,000. To promote digital payments, the Indian government has mandated that no Merchant Discount Rate (MDR) be charged on UPI transactions under Rs 2,000 since 2020. For transactions above Rs 2,000, a merchant fee of 1.1% is allowed.

Despite these changes, UPI usage in India continues to grow rapidly. In January 2025, UPI recorded 16.99 billion transactions, totalling Rs 23.48 trillion in value. This represents a 1.55% increase in volume and a 1% rise in value compared to December 2024, with annual transaction volume growing by 39%.