Google Pay and Other Fintech Platforms Introduce Convenience Fees on Transactions

Many fintech companies are now charging platform fees to cover transaction costs, making it a common practice in digital payments.

Google Pay’s New Charges

Google Pay has started applying a convenience fee of 0.5% to 1% (plus GST) on bill payments made through credit and debit cards. This follows their earlier move to introduce a ₹3 fee on mobile recharges over a year ago.

A recent report revealed that a customer was charged ₹15 as a convenience fee when using a credit card to pay an electricity bill. Google Pay states that this fee helps cover processing costs for card transactions, though they haven’t announced an exact timeline for these changes.

Other Platforms Also Charging Fees

Google Pay isn’t the only one implementing platform fees:

• PhonePe charges fees on certain bill payments made via credit or debit cards.
• Paytm applies fees between ₹1 and ₹40 for mobile recharges and utility bill payments via UPI.

Why Are These Fees Being Introduced?

Despite the increasing use of UPI (Unified Payments Interface), fintech companies still struggle to earn revenue directly from transactions. The Indian government banned the Merchant Discount Rate (MDR) on UPI payments below ₹2,000 in 2020 to encourage digital transactions. To compensate, the government has been reimbursing these costs since 2021. However, for transactions over ₹2,000, merchants can be charged a 1.1% fee.

UPI’s Growing Popularity in India

UPI transactions continue to rise rapidly:

• In January 2025, transactions reached 16.99 billion, with a total value of ₹23.48 trillion.
• This is a 1.55% increase in volume and a 1% increase in value compared to December 2024.
• Compared to the previous year, UPI transactions grew by 39%.

Google Pay remains a key player in this space, handling 37% of UPI transactions, second only to PhonePe (owned by Walmart). In January 2025 alone, Google Pay processed transactions worth ₹8.26 trillion.

As digital payments grow, platform fees are becoming more common, helping fintech companies manage rising processing costs.