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

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

PhonePe is currently testing charging a small fee of up to Rs 2 for mobile recharges above Rs 50.

Story highlights
  • PhonePe users will be charged Re. 1 for recharges between Rs. 50 and Rs. 100.
  • For recharges above Rs. 100, users will be charged Rs. 2.
  • PhonePe will begin charging processing fees for payments made using credit cards.

PhonePe, the Walmart-owned digital payments company, has started levying transaction fees on mobile recharges above Rs. 50 including payments made through UPI. The company had recorded over 165 crores UPI transactions on its platform in September.

The company is the first digital payment app to start charging for UPI-based transactions for mobile recharges. This service is being provided free of cost by its competing companies. The digital payment app has begun levying processing fees ranging from Re. 1 to Rs. 2 per transaction for mobile charges above Rs. 50. PhonePe users will be charged Re. 1 for recharges between Rs. 50 and Rs. 100, and Rs. 2 for recharges higher than Rs. 100.

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

PhonePe has been charging processing fees for payments made using credit cards in the same way that other payment applications have done so. PhonePe, along with Paytm and Google Pay, is one of the most popular and widely-used payment apps in India, accounting for a significant portion of total payments.

"We are not the only player or payment platform that charges a fee," says the author. In addition to biller websites and payment platforms, additional biller websites and payment platforms are now charging a modest fee to process bill payments. A processing fee (also known as a convenience fee on other platforms) is charged solely on purchases made using credit cards, according to a spokeswoman for the company.

The National Payments Corporation of India (NPCI) recently placed a cap on the market share for UPI. According to the rule, there can be no player which has a market share of above 30 percent. According to the Bernstein report, both PhonePe and Google Pay will have to bring down their customer incentives, to bring share towards the 30 percent cap.

In related news, PhonePe which had earlier approached the Bombay High Court seeking an injunction to restrain Resilient Innovations, which operates BharatPe, from misusing the company's registered trademarks. PhonePe has withdrawn its petition against BharatPe's Buy Now Pay Later (BNPL) Postpe platform which it had allegedly violated PhonePe's trademark and said it will file a fresh suit in this regard.