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PhonePe breaks UPI’s no-fee streak by introducing processing fee for mobile recharges

PhonePe’s recent decision may be an experiment to achieve compliance with the NPCI guidelines on market share.

PhonePe, Paytm, digital payments

PhonePe will now charge a processing fee of Rs. 1 for UPI-based mobile recharges above Rs. 50, while recharges above Rs. 100 will incur a charge of Rs. 2, the Indian Express has reported. This is the first time a payment service is charging a fee on UPI-based payments. According to data from the National Payments Corporation of India (NPCI), PhonePe remains the market leader in UPI transactions with a market share of more than 40%. This is far higher than the cap set by NPCI, which is 30%.  The transaction fee could be seen as PhonePe's attempt to come under NPCI's market cap by giving up some market share. The company, however, refutes this narrative, claiming that the new fee "has nothing to with the UPI market cap, or UPI payments. The platform fees is being applied for doing mobile recharges using the PhonePe app." Explaining the move, a PhonePe spokesperson said: We are running an experiment and for a small set of users charging a fee for the usage of the platform ranging between Re 1 and Rs 2. Recharges of denomination Rs 50 and below are not being charged. This is instrument agnostic - across credit cards, Debit cards, wallet and UPI. - PhonePe spokesperson Why did NPCI put a cap on market share for UPI transactions? Payment services will have to ensure that their total volumes of UPI transactions should not exceed 30% of the total volume of UPI transactions, the NPCI said in a circular…

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