Using PhonePe to Recharge Mobile? Get ready to pay Processing Fee

PhonePe starts charging processing fee on mobile recharges via UPI

PhonePe is the first digital payments app to have started charging for UPI-based mobile recharge transaction which is being offered for free by it’s competitors such as GooglePe and Paytm .

PhonePe has started charging processing fees in the range of Re 1 to Rs 2 per transaction for mobile recharges done for value above Rs 50, even through UPI.

“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,” a PhonePe spokesperson said.

They also said that “We are not the only player or payment platform charging a fee. Charging a small fee on bill payments is now a standard industry practice and is done by other biller websites and payment platforms also. We charge a processing fee (called a convenience fee on other platforms) on payments with credit cards only”.

However, to make mobile recharges still lucrative, PhonePe has also decided to offer guaranteed cashback to customers. The company said that users recharging via the PhonePe app will win assured cashback of up to Rs 50 on prepaid mobile recharges. This will be applicable to users after the completion of three prepaid mobile recharges, above Rs 51. 

Last week, PhonePe reported a 44% drop in losses to Rs 888 crore for FY21, while revenues jumped over 84% year-on-year to Rs 690 crore. PhonePe, like most fintechs, has been providing services free of cost to users even as it incurred operational expenses. This was part of a strategy to acquire market share. The reduced losses reported by the company were an outcome of cutting operational costs. It had almost halved its marketing and promotional spending.

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