Three-Fourths of Indians Likely to Ditch UPI Over Merchant Fees: Survey

A significant majority of Indian digital payment users would switch to alternative payment methods if merchants begin charging them for UPI transactions, according to recent survey findings that highlight the fragility of the digital payments ecosystem.

The Government has explicitly stated that merchants should not pass on the 0.4 percent Merchant Discount Rate (MDR) charged on UPI payments exceeding ₹2,000 to customers. However, the survey suggests that three out of four users would abandon UPI in favour of cash, credit cards, debit cards, or bank transfers if shopkeepers attempt to recover these costs.

The findings underscore a critical vulnerability in India's digital payment infrastructure, which has grown substantially in recent years. User adoption of UPI has been underpinned by the seamless, fee-free experience it offers to consumers. The prospect of additional charges could potentially reverse years of progress in moving India toward a cashless economy.

The survey results may prompt policymakers to review mechanisms ensuring merchants bear transaction costs without passing them to consumers, or risk seeing widespread reversion to traditional payment methods. The issue highlights the delicate balance required to sustain growth in India's rapidly evolving fintech landscape while protecting both consumer interests and merchant viability.