New Delhi,Feb 21: Google Pay has started charging a small fee when you use it to pay bills like electricity or gas. If you pay using a debit or credit card, the fee will be between 0.5% and 1% of the total bill, plus some extra tax (GST).

This isn't the first time Google Pay has added fees. Recently they introduced a Rs 3 charge for mobile recharges. This new fee shows that Google Pay and other similar companies are trying to make money from transactions. They are looking for ways to cover their costs and make their business profitable while still growing.

PhonePe applies a convenience fee on bill payments made via credit or debit cards, including for utilities like water, electricity, and piped gas. Similarly, Paytm charges a fee ranging from Rs 1 to Rs 40 for recharges and bill payments through UPI.

Google Pay is one of the apps people use to make payments using UPI ot Unified Payments Interface, a system in India that allows people to send money directly from one bank account to another using their smartphones.

Google Pay, with its 37%share of UPI transactions, is the second-largest player after Walmart-backed PhonePe.In January, it processed UPI transactions amouting to Rs.8.26 lakh crore.

While UPI has revolutionized the way people transact in India, the challenges in monetizing UPI transactions are real, especially for fintech companies. Although UPI has become an integral part of everyday financial transactions, the low transaction cost, which is typically 0.25% for person-to-merchant transactions, makes it difficult for fintech players to generate significant revenue directly from processing these payments.

There are several challenges along with that fintech companies are now focusing on diversifying their offerings, finding ways to add value through customer experience, partnerships, and premium services, rather than relying solely on UPI transaction fees.

In the financial year 2024, the total cost of processing UPI transactions was about Rs 12,000 crore.Of that amount, Rs 4,000 crore was spent on processing smaller UPI transactions, which were for amounts less than Rs 2,000 each.

Despite these costs, UPI is growing really fast. In January 2025, the number of UPI transactions reached 16.99 billion that is almost 17 billion. These transactions added up to a total of Rs 23.48 lakh crore, showing a 39% increase compared to January 2024. This means UPI is becoming more popular, with more people using it to make payments every year.

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