New Delhi : UPI’s six-year run as a largely free payment option for merchants is set to face a test from October 15, with a 0.4% merchant discount rate (MDR) coming into effect for person-to-merchant payments above Rs 2,000. The remaining respondents said they would look for another payment option or avoid or delay the purchase. The survey, conducted by LocalCircles, received more than 67,000 responses from UPI users across 291 districts.
For the specific question on what consumers would do if a merchant charged an additional fee, there were 31,206 responses. MDR, or merchant discount rate, is the fee charged on a digital payment transaction and shared among banks, payment service providers and UPI apps involved in running the payment network. Until now, UPI transactions have operated under a zero-MDR structure for merchants. From October 15, a 0.4% MDR will apply to person-to-merchant UPI payments above Rs 2,000.
LocalCircles asked UPI users what they would do if a merchant asked them to pay an additional fee for making a UPI payment above Rs 2,000. Another 26% said they would switch to a credit card, while 14% said they would use a debit card. Another 4% would use bank transfers, NEFT or IMPS, while 9% would ask the merchant for another payment option without an additional charge. Only 14% said they would continue using UPI and bear the additional amount. Another 2% said they would avoid or delay the purchase and 4% could not say.
The biggest shift could be towards cash, with more than one in four respondents saying they would return to it for such payments. The survey also asked users about their longer-term payment behaviour if UPI transactions above Rs 2,000 resulted in an additional cost. Among 37,654 responses, 26% said they would use credit cards most often and another 26% said they would use cash. Only 20% said UPI would remain their most-used payment mode for purchases above Rs 2,000 if it carried an additional cost. Four% could not say.
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