Four banks bag bulk of UPI beneficiary payments

While fintechs, PhonePe and Google Pay have a major chunk of the overall UPI payments market as third party applications, a handful of banks dominate the merchant payments on the popular platform.

Almost 60% of the transactions are made to Yes Bank, HDFC Bank, ICICI Bank, and Axis Bank handles according to data shared by the National Payments Corporation of India that runs UPI. Among the four private sector lenders, Yes bank has the highest share of such transactions at 40%, which has doubled in the last two years.

NPCI identifies them as ‘beneficiary banks,’ meaning banks which receive UPI payments. A large chunk of these transactions are merchant payments, where the customer makes a UPI transaction to the merchant’s account, according to industry insiders.


Yes Bank has emerged as the winning entity in this space because it majorly powers PhonePe merchants. Last year, they also took the merchants working with Paytm Payments Bank, after the Reserve Bank of India shut down their operations in early 2024.

In its March 2025 results, Yes Bank spoke about four out of the six largest payment applications working with it and as a payee service provider it processes 318 million transactions daily.

“When a consumer is making an UPI payment to a merchant, it goes to the merchant’s escrow account and that is where a lot of major fintechs use Yes Bank’s services, resulting in this disproportionate share of Yes Bank in that space,” said a founder of a digital payments startup on the condition of anonymity.

Axis Bank has seen its share of processing of incoming UPI payments go up to 10% from around 7% two years back. SBI is the only public sector lender in this mix to consistently maintain a 10% share in these transactions.

Interestingly, such a concentration does not show up in the case of banks through which the transaction originated, that is on the customer’s bank account. As per NPCI data, SBI is the largest player in that ecosystem, with a 25% market share driven by the sheer size of the bank. Other private sector lenders have anywhere between 5% to 8% market share, showing a much-diffused concentration on that side.

Banks are interested in grabbing a chunk of the merchant payments because of its revenue generating opportunity. Merchants are offered UPI free of cost as a government mandate, but banks try to get few basis points in lieu of running these partnerships with fintechs.

“Banks get a very small payment from the fintechs in lieu of processing their escrow accounts, they charge for services like pay-outs and others,” said a chief executive at a fintech firm.