Google Pay starts convenience fee for these payments: Here's how much you have to pay for transactions now

Google Pay has begun charging a convenience fee for certain payments made using credit and debit cards. This includes payments for electricity and cooking gas bills, which were previously free for low-value transactions. The fee ranges from 0.5% to 1% plus GST. This move aligns Google Pay with other UPI platforms like PhonePe and Paytm, which also impose similar charges.

Google Pay convenience fee

A review by ET found that a customer was charged approximately Rs 15 as a "convenience fee" while paying an electricity bill with a credit card. The charge, including GST, was also described as a "processing fee for debit and credit card transactions."

Google Pay Convenience Fees Limited to Card Transactions

Google Pay’s website specifies that while the convenience fee applies to card payments, UPI transactions linked directly to bank accounts remain free. The exact timeline for the introduction of these charges is unclear.

Other Platforms Also Charge Platform Fees

PhonePe applies convenience fees on card transactions for specific bill payments, such as water, piped gas, and electricity. Paytm imposes platform fees ranging from Rs 1 to Rs 40 for recharges and various bill payments, including gas, water, and credit card settlements.

UPI Transaction Costs and Government Policies

Despite UPI's widespread use, fintech firms have struggled to generate significant revenue. According to PwC, processing UPI person-to-merchant transactions costs stakeholders approximately 0.25% of the transaction value. In FY24, UPI transaction processing costs reached Rs 12,000 crore, with Rs 4,000 crore spent on transactions under Rs 2,000.

Since 2020, the Indian government has waived the merchant discount rate (MDR) for UPI transactions below Rs 2,000 to promote digital payments. From 2021, the government began covering MDR costs for smaller transactions. Transactions exceeding Rs 2,000 allow for a 1.1% merchant fee.

UPI Continues to Grow

UPI transaction volumes and values continue to increase. In January 2025, UPI recorded 16.99 billion transactions worth Rs 23.48 lakh crore. This marks a 1.55% volume increase and a 1% transaction value rise from December 2024, reflecting a 39% year-on-year growth.

"The Indian government has played a crucial role in ensuring UPI's growth, covering the costs associated with low-value transactions to encourage adoption," an industry executive said. "However, the absence of MDR for smaller transactions has left UPI platforms with limited avenues to generate revenue directly from users."