PhonePe, the Walmart-owned digital payments company, has started levying transaction fees on certain transactions including UPI. The company had recorded over 165 crores of UPI transactions on its platform in September.
The company is the first digital payment app to start charging for UPI-based transactions. This service is being provided free of cost by its competing companies. The digital payment app has begun levying processing fees ranging from Re. 1 to Rs. 2 per transaction for mobile charges above Rs. 50. PhonePe users will be charged Re. 1 for recharges between Rs. 50 and Rs. 100, and Rs. 2 for recharges higher than Rs. 100.
PhonePe is the first digital payments app that is charging users for UPI-based transactions which are being offered for free by its competitors like GooglePay and PayTM among others.
“We are not the only player or payment platform charging a fee. Charging a small fee on bill payments is now a standard industry practice and is done by other biller websites and payment platforms also. We charge a processing fee (called a convenience fee on other platforms) on payments with credit cards only,” a spokesperson of PhonePe said.
The Walmart-owned company has the highest market share in monthly Unified Payment Interface (UPI) as well as Bharat BillPay Services (BBPS) transactions. It makes up 45 percent of UPI monthly volumes and 47 percent of the monthly value of transactions.
The latest data shared by the National Payments Corporation of India (NPCI) on BBPS for August showed that PhonePe leads the market with a 49 percent volume share.
On the merchant side, UPI players are not allowed to levy any charges due to the Zero Merchant Discount Rate (MDR) policy which came into effect in January 2020. MDR refers to the charges levied to merchants for using digital payment modes. Under the policy, merchants should not be levied any charges on digital payments made through UPI, RuPay debit cards and UPI QR codes.