According to the results of a conducted survey, almost half of the country's traders refuse to pay any fees (Merchant Discount Rate, MDR) for UPI transactions exceeding the amount of 2000 rupees. Data from LocalCircles indicates that 41% of all surveyed traders stated their refusal to pay these fees.
Furthermore, 9% of respondents reported that they do not accept payments via UPI at all, while 33% indicated they are willing to pay a rate of 0.25% or less.
To conduct this study, LocalCircles surveyed 32,796 people across various districts. MDR is the fee that businesses pay payment processors for accepting digital payments. Previously, before December 2019, the MDR on person-to-merchant UPI transactions was up to 0.3% of the transaction amount. A zero MDR rate was introduced in January 2020.
LocalCircles asked: 'If you are a business that accepts UPI payments, what is the maximum MDR you are willing to bear for UPI payments above INR 2000?' This question received 32,796 responses. As a result, the largest group, comprising 41%, stated that they would not incur any MDR costs. Other groups responded as follows: 15% — 0.04%, 12% — 1%, 8% — 0.25%, 5% — 0.5%, 5% — 0.2%, 5% — 0.1%, and 0% — 0.08%. Additionally, 9% stated that they do not accept UPI payments,' LocalCircles reported in its statement.
Moreover, this month LocalCircles conducted another survey, collecting over 45,000 responses from UPI users residing in 322 districts of India. The results showed that 53% of surveyed UPI users are willing to switch to other payment methods for higher-value transactions if an MDR is charged to them. Credit cards (27%), debit cards (14%), and cash or bank transfers (12%) were named as alternative options. Only 12% stated that they are willing to pay this commission and continue using UPI, while another 18% said they would only use UPI if the merchant absorbed the costs.