Google Pay begins charging convenience fees on bill payments via credit, debit cards

Google Pay, which competes with PhonePe and Paytm, has started levying a convenience fee on bill payments made using credit and debit cards, marking a shift toward monetizing digital transactions in India’s fast-growing fintech space.

The new charges, ranging between 0.5% and 1% of the transaction amount, along with GST, will apply to payments for electricity, water, and cooking gas bills, according to media reports.

However, UPI payments made directly from linked bank accounts will continue to remain free.

Convenience fee on mobile recharges

This is not the first time Google Pay has introduced fees on transactions. In 2023, the platform imposed a Rs 3 convenience fee on mobile recharges.

The latest charge aligns with a broader industry trend, as fintech companies look to offset processing costs and establish a sustainable revenue model.

According to industry estimates, processing UPI transactions costs stakeholders approximately 0.25% of the transaction value. In FY24 alone, these costs amounted to nearly Rs 12,000 crore, with Rs 4,000 crore incurred for transactions below Rs 2,000.

Despite the financial burden, UPI continues to grow at an unprecedented pace. In January 2025, UPI transactions surged to 16.99 billion, totalling Rs 23.48 lakh crore—representing a 39% year-on-year increase.

What about PhonePe and Paytm?

Google Pay’s move follows similar steps taken by its competitors. Walmart-backed PhonePe, India’s largest UPI platform, also levies a convenience fee on bill payments made via credit and debit cards.

Similarly, Paytm charges between Rs 1 and Rs 40 for mobile recharges and bill payments through UPI.

With a 37% market share in total UPI transactions, Google Pay is the second-largest digital payments player in India after PhonePe. In January 2025, it processed UPI transactions worth Rs 8.26 lakh crore.

Despite its vast user base, generating revenue from digital payments remains a challenge, as most UPI transactions—especially person-to-merchant payments—do not carry a direct fee for consumers.