76% of UPI users would shift to cash or cards over 0.4% fee — SkimNews
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- The proposed 0.4% MDR on UPI Person-to-Merchant transactions above ₹2,000 is set to take effect from 15 October, with merchants liable to pay it.
- A LocalCircles survey of 67,000+ UPI users across 291 districts found 76% would move their larger payments off UPI if an additional cost is imposed on transactions above ₹2,000.
- Only 14% of respondents said they would continue paying through UPI and bear the extra amount, while 27% would switch to cash, 26% to credit cards, and 14% to debit cards.
- For purchases above ₹2,000 specifically if UPI carried an extra cost, 26% chose credit cards and 26% cash as their preferred alternative — and only 20% said they'd stick with UPI most often.
- Credit and debit cards combined could capture 39% of higher-value payments if UPI becomes chargeable, according to the survey.
- A separate LocalCircles merchant survey of 32,000+ businesses across 242 districts found only 17% willing to bear the 0.4% MDR, while 41% refused any MDR and 9% don't accept UPI at all.
- The most common acceptable ceiling among merchants was just 0.04% — selected by 15% — which is one-tenth of the proposed rate.
Why it matters: With 41% of merchants refusing any MDR and only 17% willing to bear the proposed 0.4%, cost pass-through to consumers is near-certain — and since 76% of consumers say they'd then defect to cards or cash, the policy risks shrinking UPI's share of large-value payments rather than monetizing it.
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