UPI MDR above ₹2,000: Survey finds 76% of consumers may shift to cards or cash if merchants pass on 0.4% fee

A survey of over 67,000 UPI users suggests 76% may shift to cards, cash or bank transfers for purchases above ₹2,000 if merchants pass on the proposed 0.4% MDR. Only 14% said they would continue using UPI and bear the additional cost.

The proposed 0.4% Merchant Discount Rate (MDR) on UPI Person-to-Merchant (P2M) transactions above ₹2,000 is set to take effect from 15 October, with merchants liable to pay it.

While merchants have expressed concerns about bearing the charge, a new LocalCircles survey suggests consumers may also resist paying it if merchants pass the cost on to them.

The LocalCircles survey, which received over 67,000 responses from UPI users across 291 districts, found that most consumers would switch to another payment mode if an additional UPI fee is charged on transactions above ₹2,000.

What will consumers do if merchants add the UPI fee?

According to the survey, only 14% of respondents said they would continue paying through UPI and bear the additional amount if a merchant charged a fee.

Another 27% said they would pay in cash, while 26% would switch to a credit card. Around 14% would use a debit card and 4% would opt for bank transfer, NEFT or IMPS.

The survey also found that 9% would ask the merchant for another payment option without an additional charge, while 2% would avoid or delay the purchase. About 4% could not say what they would do.