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LocalCircles: UPI value could fall 10%, volumes 4% once 0.4% MDR hits payments above ₹2,000 on October 15
Only 14% of UPI users would keep using UPI if merchants passed the MDR on to them, a LocalCircles survey found. The estimate covers monthly volumes and person-to-merchant payments above ₹2,000, with the 0.4% charge applying from October 15.
Channel facts
Figures from Storyboard18,
| Users moving payments above ₹2,000 away from UPI: | 76% |
|---|---|
| Merchants ready to absorb 0.4% MDR: | 17% |
| Merchants refusing any MDR: | 41% |
| Share of merchant value from payments above ₹2,000: | 67% |
What it means for online and offline
If the 0.4% MDR applies to UPI payments above ₹2,000 from October 15, 67% of merchant value is exposed and only 17% of merchants say they would absorb it, so decide now whether to absorb the fee, steer big-ticket baskets to cards, wallets or other rails at checkout, or price it in, and treat the LocalCircles figures as a survey estimate, not a forecast.
Signals to track
- An official notification or circular confirming, delaying or narrowing the October 15 MDR
- The first monthly UPI value and volume prints after October 15, against the -10% and -4% estimates
- Reports of merchant surcharges or 'no UPI above ₹2,000' signage at major retailers
- Card and wallet share of payments above ₹2,000 rising
- A follow-up survey showing a change in the 76% of users who would move payments elsewhere
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- The payments regulator and government are likely to face mounting pressure to clarify, defer or narrow the MDR before October 15, given how few users (14%) would keep paying the charge.
- Merchants, especially those with many tickets above ₹2,000, are likely to steer customers toward cards, cash or other rails rather than absorb the fee, since only 17% say they would take it on.
- Card networks, wallet providers and other non-UPI rails may launch offers aimed at capturing the above-₹2,000 payments that users move away from UPI.
- Large omni-channel retailers may negotiate bespoke MDR terms with their acquirers and payment apps, or push customers to in-app and card checkout for larger baskets.
- Consumer and merchant groups are likely to publish further surveys and lobby against the charge, keeping the 10% value and 4% volume estimates in the debate.