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PhonePe starts charging transaction fees on mobile recharge above Rs. 50





  • PhonePe begins charging processing fees on UPI transactions for mobile recharges.
  • The company recorded more than 165-crore UPI transactions on its platform in September which constitutes a 40% share among the app segment.
  • Apart from payments, the platform also offers insurance, gold purchasing, and mutual fund services.

PhonePe is the first digital payment software to charge customers for UPI-based transactions, which are currently available for free from competitors such as GooglePay and PayTM. The company said it is not charging anything for mobile recharges below ₹50, but for recharges between ₹50 and ₹100, it is charging ₹1 and above ₹100 mobile charges, the customers will be charged ₹2.

PhonePe recorded more than 165-crore UPI transactions on its platform in September which constitutes a 40% share among the app segment. PhonePe is also charging processing fees for payments made through credit cards like other players.

The National Payments Corporation of India (NPCI) also placed a cap on the market share for UPI which does not allow any player to have a market share above 30%. The Bernstein report said the NPCI market share caps will require PhonePe and Google Pay to tone down their customer incentives in order to bring share towards the 30% cap.

The company Officials said:

“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.”

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“On recharges, we are running a very small-scale experiment where a few users are paying for mobile recharges. Recharges below ₹50 are not charged, recharges between ₹50 and ₹100 are charged Re 1 and above ₹100 are charged ₹2. Essentially, as a part of the experiment, a majority of users are either not paying anything or paying Re 1.”

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.

The policy also mandates companies with a turnover of over Rs 50 crore to make low-cost modes of payments available. The policy has led to a long-drawn debate that- There seems to be no money for companies in the business of payments.

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