The race for banks to get merchants on their UPI platform is on. Online payment aggregator ftcash has tied up with ICICI Bank for enabling payments on the Unified Payments Interface (UPI). ftcash is a virtual POS for micro-merchants to accept payments through credit cards, debit cards, wallets such as Freecharge, Mobikwik, PayPal etc.

This partnership will enable ftcash to have UPI as a payment option for their customers and ICICI Bank would process the payment.

Last week, Razorpay, a payment gateway aggregator, tied up with YES Bank, ICICI Bank and HDFC Bank for UPI payments. Similarly, Ezetap has also signed on with YES Bank for UPI payments.

What banks get out of the deal: The deal will allow banks to get access to smaller merchants for UPI payments. Banks are allowed to charge a higher fee to merchants, rather than P2P payments on the UPI. Right now, for transactions on the UPI,  merchants have to pay 0.75% for transactions less than Rs 2,000 to the banks and 1% for transactions above Rs 2,000.

Typically, there will be a revenue sharing agreement with these aggregators with the banks. ftcash has not disclosed its revenue share but in the case of Razorpay, the banks agreed to share 20 basis points per UPI transaction with them for merchant.

Currently, ftcash has more than 5000 merchants on its platform and aims to bring it up to 60 million micro-merchants such as milk vendors, newspaper agents, kirana stores etc.

ftcash is backed by IcyCap Ventures. It had raised Rs 1 crore from IvyCap in March 2016 and at the time that it would use the funds for customer and merchant acquisition and for development. It was also selected by PayPal’s incubator progamme for fintech startups in November 2015. ftcash was launched in mid-June 2015 by Sanjeev Chandak, Deepak Kothari and Vaibhav Lodha.

Paytm will not offer its wallet to ftcash

In April 2016, Paytm announced that it would not offer its wallet services to payment aggregators such as Ezetap, JustPay and FTCash. Paytm said that this was done “to build a captive audience.” Chief commerce officer Kiran Vasireddy told MediaNama that 0.3-0.4% of Paytm’s transactions comes through such payment aggregators. Vasireddy also explained that Paytm’s user experience was hampered as customers had to go through a number of hops to clear a payment and hence opted for a more direct relationship with merchants.

Update: The story was edited for clarity to explain the deal with banks better.